Affected by multiple factors such as supply and demand relationship & risk aversion, silver prices have risen rapidly.
Affected by factors such as increased risk aversion due to increased geopolitical tensions, the Fed's expectation of interest rate cuts, and the increase in PV module production schedules, silver prices have recently risen rapidly, with a price of about 6,000 yuan/kg at the beginning of 2024 and a price of more than 8,200 yuan/kg as of May 20, 2024. According to the World Silver Council, the total global silver demand in 2023 will be 35,551 tons, and the global silver gap in 2023 will be around 4,400 tons; In 2024, driven by the recovery of mineral silver production, the total global silver supply is expected to be about 31,700 tons, and the total demand for silver is expected to be about 36,700 tons, with a gap of about 5,000 tons. From the perspective of demand structure, silver demand is mainly divided into three parts: industrial manufacturing, jewelry and silverware, and physical investment, of which industrial silver is the largest silver demand component, accounting for more than 50% of the total demand, and industrial silver is mainly divided into silver paste, silver plating, silver alloy, silver contacts, etc., involving fields including photovoltaics, new energy vehicles, electric power, semiconductors, etc., of which photovoltaic silver accounts for about 30% of the highest, and the photovoltaic industry has developed rapidly in recent years, with annual module shipments increasing from less than 100GW in 2020 to 2023 The annual consumption of 500GW+, especially the N-type TOPCon and HJT technology silver consumption has increased significantly & the proportion of shipments has increased rapidly, making the supply and demand of silver tend to be tight.
The continuous rise in silver prices is beneficial for the industrialization of new silver reduction technologies 0BB and HJT.
We have considered the impact of silver prices rising from 6,000 yuan/kg to 12,000 yuan/kg on the selling prices of different pastes. The key variables are silver content and processing fees.
- The silver content of high-temperature silver paste and low-temperature silver paste is both 90%.
- The silver content of 50% silver-coated copper is 50%.
- The silver content of 30% silver-coated copper is 30%.
- High-temperature silver paste: 600 yuan/kg
- Low-temperature silver paste: 900 yuan/kg
- 50% silver-coated copper: 1,200 yuan/kg
- 30% silver-coated copper: 1,500 yuan/kg
(1) 0BB:
- We calculated that for every 1,000 yuan increase in silver prices, 0BB can save an additional 2-4 cents/W.
- Compared to the 20BB technology, the paste consumption of HJT under 20BB is about 10mg/W, which can be reduced to 6-7mg/W by applying 0BB, saving 3-4mg/W.
- Considering pure silver paste or silver-coated copper paste, we calculated that if the price of silver rises from 6,000 yuan/KG to 12,000 yuan/KG, the cost savings of 0BB can be magnified from 0.01-0.02 yuan/W to 0.02-0.04 yuan/W.
(2) HJT:
- We calculated that for every 1,000 yuan increase in silver prices, HJT can save 7-8 cents/W by applying 0BB+30% silver-coated copper technology.
- Unlike TOPCon technology, HJT's low-temperature advantage allows it to use silver-coated copper paste, while TOPCon can only use pure silver paste.
- HJT's 50% silver-coated copper has already been basically industrialized, and 30% silver-coated copper is expected to be introduced into mass production in 2024.
- We calculated that if the price of silver rises from 6,000 yuan/KG to 12,000 yuan/KG, the cost savings of HJT by applying 0BB+30% silver-coated copper can be increased from 0.04 yuan/W to 0.09 yuan/W.
The industrialization of HJT is approaching, accelerating cost reduction and efficiency improvement.
On the cost side, the application of 0BB + silver-coated copper in HJT's non-silicon costs has given HJT an advantage in paste materials. Currently, the equipment investment for HJT is around 3-4 billion yuan/GW, which is higher compared to TOPCon's 1.5-1.7 billion yuan/GW. We believe that with the localization of equipment parts and Megatech's launch of 1GW large-capacity equipment, the cost can be further reduced in the future. On the efficiency side, Huasheng's latest mass production efficiency has reached 26%, and the power of the 210 module is around 710-720W. We believe that with the introduction of new technologies in 2024, the power can reach 740W. We believe that technological innovation is the core driving force for opening a new cycle in the photovoltaic industry, and HJT as a new technology is expected to usher in large-scale industrialization. Reviewing the history of the photovoltaic industry, the core driving force for each cycle has been technology iteration - when the technology matures, the profitability is good, driving the industry into a large-scale expansion stage. As the capacity is concentrated, the industry experiences overcapacity and declining profitability, entering a capacity clearing stage, which in turn forces new technological breakthroughs to achieve cost reduction and efficiency improvement, opening a new cycle. As the competition of TOPCon intensifies, its profitability is gradually deteriorating, and capacity oversupply is increasing, the industry urgently needs a new round of technological cycle. HJT is expected to usher in large-scale expansion.
Source: SOOCHOW SECURITIES