Even As Solar Glass Prices Retreat, Price Pressures To Continue On Modules in 2021

The year 2020 was highly profitable for solar glass manufacturers everywhere. Not because they sold more, but because they could get much higher prices for their output. After being range bound for all of 2019 and right upto August 2020 between RMB 25-27 (1 RMB = Rs 11.3), solar glass prices shot up to a high of almost 50 RMB in a matter of months since then. Xinye Solar, one of the biggest solar glass leaders, earned US$15.8 billion in 2020- a 35% jump in revenue- and made a net profit of US$5.86 billion- an almost 89% jump. Another firm, Luoyang Float Glass increased their profits by 6 times. While the current rate is around RMB43 per sq  meters, proceeding into H2 2021, prices are likely to reduce below RMB35 per sq meter or lesser.

In India, the situation was made ‘worse’ by the imposition of a 9.71 percent CVD (Countervailing duty) for five years, starting March this year. So what caused this shortage and high prices in the first place. Two trends. The shift to a higher share of bifacial modules in advanced markets including China, and the new trend towards larger panels. Both together have contributed to a much higher demand for solar glass , leaving industry capacity lagging.

Belatedly, global China based manufacturers like Xinyi Solar, Flat Group, Caihong Group, CNBM and CSG Holdings have all announced significant expansion plans or plans to expedite their plans, much like Borosil Renewables, the lone player in India, has.  For the record, Borosil, after  grappling with Chinese and Malaysia based competition, also swung into profits in 2020, thanks to the price improvements. The firm is set to announce another strong quarter in  results for the Jan-Dec period now. It is also doubling capacity to 900 tonnes per day, equivalent to 5 GW by 2022. The firm claimed earlier that Chinese players control almost 95% of the solar glass market, so protection was strongly needed to enable it to build a level of scale, and for the country to build some self sufficiency in the area. But the picture is changing quite quickly.

In China, the global hub for solar equipment, major module manufacturers lobbied in November 2020 for the Chinese government’s intervention, saying that solar-grade glass prices had spun out of control as they had more than doubled in the last four months. Some small-scale module suppliers had apparently been quoted even RMB50 per sq metre at the time, leading to module manufacturers scaling back production to rein in demand. New policies were brought into force to deal with supply constraints which also spilled into the following year, ensuring prices continue to be high initially in 2021. However, manufacturers are anticipating a decline over the majority period of this year due to fresh capacity coming online. 

The big issue will be the extent of the decline. Established manufacturers expect to see the decline limited to 35-40 RMB at most, a price at which most will deliver healthy profit margins. What will also be interesting is the pace of the shift to larger modules, as that will also impact demand.

For the solar manufacturing industry, the bigger risk might be the hike in poly silicon prices, which has dealt a further blow. Industry sources inform us that multiple Chinese suppliers have in fact chosen to cancelled orders and forfeit deposits, rather than deliver at contracted rates stuck last year. Something the larger, vertically integrated players warned of to prospective clients in India . The big hit has been caused by upto 60 percent jumps in prices for mono-grade polysilicon even as the hike in market price for  multi-grade polysilicon was not as sharp.

Thus, even as solar glass prices stabilise, overall prices of solar modules will not see an end to volatility in 2021.