The Upstream Solar Supply Chain finally sees some "Sunrays of ASP Hike"

The solar panel industry has been on a major upswing in 2013, with stock prices doubling even tripling for major solar panel makers such as Trina Solar, Canadian Solar, Sunpower etc. The reason has been the very strong demand leading to full capacity utilization and ASP increase of solar products. Solar module prices have seen some increase which has led to gross margin improvement for all players. Jinko Solar (JKS) has in fact become the first Chinese panel maker to return to the black after 2 years of the industry downturn. It is expected that the other solar panel makers will also show profitability by the end of the year. Analysts are scrambling to revise the estimates upwards, as the industry shows increasing demand. The upstream solar supply chain is also finally showing signs of hope. Note the gross margin improvement for polysilicon and wafer players has been much lower than the solar panel guys. The reason is that their ASPs have not budged even as solar panel pricing has improved. But now it looks like the dark clouds are finally lifting up from the solar wafer makers.

Green Energy Technology which is the largest Taiwanese solar wafer producer and a top 10 global producer is reporting a slight increase in ASP. Note solar wafer prices have stagnated to the 20c/watt level, falling almost 80% in the last 2-3 years. All the solar wafer makers are making losses and gross margins are just about breakeven for even the biggest and lowest cost makers. The capacity expansion have almost completely stopped with GT Advanced Technologies almost shutting down its DSS division. But as the demand continues to grow and capacity remains the same, prices are starting to increase for the wafer guys. Energy Trends is even predicting a polysilicon shortage in Q114 as low price have shuttered down large portions of the upstream solar material capacity. This trend is a good one for the upstream solar companies. It might be time to move your profits from the solar panel segment into the upstream solar segment. Best companies to buy are Renesola (SOL) and GCL Poly.

DigiTimes

The average spot market quote for solar-grade polycrystalline silicon wafer has risen slightly by 1.18% to US$0.86/W, while that for high-efficiency models by 1.09% to US$0.926/W, according to Taiwan-based maker Green Energy Technology (GET). Consequently, the average spot market price for solar-grade polycrystalline silicon wafers is likely to rise to above US$1.0/W, especially for models with energy conversion rates of over 17.4%, in the fourth quarter, GET said.

PV-Tech

According to a research note from EnergyTrend, a research division of TrendForce based in Taiwan, PV demand could potentially outstrip supply by the first quarter of 2014.

TrendForce noted that with continued strong downstream PV demand into next year current production levels of polysilicon can meet around 7.2GW of module shipments per quarter.

However, EnergyTrend estimates that demand of silicon wafers will be around 8GW or higher in the first quarter of 2014, coupled with lower polysilicon inventory levels there could be a squeeze on supply until idled capacity or new capacity built but not ramped can be brought online.