As Chinese Majors Slash Wafer Prices Dramatically, Expect Moderation In Panel Prices Finally

China is the world’s largest producer of solar panels and any price fluctuations in the country have implications for the rest of the world with respect to supply chain and supply and demand dynamics. As per a report by the International Energy Agency, China dominates the photovoltaic industry with 80% share. This domination is particularly acute at the early stages of the solar supply chain, namely, Polysilicon, Ingots and Wafers.

Stepping into 2023, leading Chinese manufacturers have finally cut wafer prices, and linked to that solar panel prices, which is sure to cause a rise in demand worldwide, especially in crisis-hit Europe. Polysilicon, which is a major raw material in solar business, has witnessed a drop in cost because of supply exceeding demand as fresh capacities finally came in. Leading Chinese manufacturers, like Longi, TCL Zhonghuan and Tongwei Solar have cut prices, leading to slides as much as 27 per cent, the China Silicon Industry Association revealed.

A slew of manufacturers in China were left with no choice but to slash prices as demand was hit following the rise in COVID, which, in turn, had a bearing on solar power installation. By the end of 2022, supply was in excess of demand.  With the fresh prices cuts, new demand is expected to be created in Europe along with other significant markets like Southeast Asia, Middle East and Africa, experts say. They are also of the view that the domestic industry of China may witness price conflicts between manufacturers of solar wafers, given the imbalance in supply and demand.

But will these lead to renewed interest in markets like India too? It’s too early to tell, especially as India has erected significant tariff walls during FY22 on solar imports in any case, and even the newer rates remain too high for the comfort of many Indian developers sitting on winning bids from 2019-21.