1. Component Price Definition: Emergence of Oligopoly Trend
Recently, the photovoltaic (PV) industry set a minimum price for components at 0.68 yuan/W. This move is seen as an attempt at oligopolistic behavior, driven by major industry players and associations forming a price alliance. The goal is to concentrate the market landscape, allowing leading companies to capture more market share while diminishing the competitiveness of second-tier companies.
The 0.68-yuan price is based on the industry-wide cash cost. However, upstream silicon wafer and cell prices and profits remain low. Consequently, profits will increasingly flow to the component sector, especially benefiting leading companies. Additionally, the 2024 surplus in upstream capacity, paired with end-market control over sales channels, is likely to further boost component sector pricing power.
2. Technological Iteration: Minimal Shifts, Leading Companies Dominate
Current technological advancements in the PV industry have not brought about major disruptions, unlike the shift from polycrystalline to monocrystalline in the past. Although BC technology shows advantages in appearance and shading efficiency, its high cost limits its potential for substantial excess profits, making it unlikely to drive an industry-wide shift. Despite this, leading companies like Longi and Aiko continue to achieve certain excess profits with existing technologies. This indicates that even in times of minimal technical shifts, these dominant players maintain a strong position.
3. Supply and Demand: Potential Marginal Improvement by Q2 Next Year
The PV industry’s supply-demand balance may see marginal improvement by the second quarter of next year, based on two key assumptions: slight demand growth and stable or contracting supply. On the demand side, growth is expected in domestic, U.S., and emerging markets, while Europe is likely to remain stable. For supply, silicon material and cell capacities have nearly peaked, and the next six months may see some capacity reduction or market exits, leading to supply contraction. Against this backdrop, the steep cost curve for silicon material could drive prices from the current 44-45 yuan range up to over 50 yuan, likely enhancing the profitability of industry leaders. Furthermore, energy consumption controls on silicon materials and wafers will be enforced, primarily through measures such as power restrictions.
4. Industry Outlook: Short-Term Fluctuations, Positive Long-Term Prospects
While short-term market fluctuations are evident, the long-term outlook for the PV industry remains optimistic. With continued advancements and cost reductions, the industry is expected to reach a gigawatt-scale market. As the supply-demand balance is projected to improve, integrated component leaders remain well-positioned. Despite high-efficiency, premium-priced new technologies such as HJT, current excess profits are still insufficient to prompt a widespread industry shift. Major companies are thus likely to sustain stability in their current technological approaches.
In summary, the PV industry is experiencing notable shifts in component price-setting, technological iteration, supply-demand dynamics, and profitability outlook. Investors should monitor these developments closely to seize potential opportunities and address emerging challenges in the market.
Source：https://mp.weixin.qq.com/s/NlfDzsUESYEtSfp9CCdOrQ
