New Surge in Downstream Demand has Driven the Polysilicon Shortage to a Crisis Point – JinkoSolar

In an official statement, the global vice president of Chinese solar manufacturer JinkoSolar, Dany Qian, said that polysilicon prices are not expected to drop for at least six months. The company’s general manager for South & Central Asia, Daniel Liu, stated that Jinko is not backing out from any of the signed deals with its Indian customers due to the raw material supply shortage and the rising prices, as reported by unspecified false reports. The company has had record shipments to India in 2020 and Q1-2021!

Polysilicon price rise and shortage continues to loom the industry forcing panel suppliers to slow down production. The price and supply situation has been steadily worsening since last year. Market research firm, Energy Trend reported the latest polysilicon price of 135 RMB per kg, a rise of 3.31% compared to last month and expects a further price increase up to 150 RMB/kg very soon. Soon after, media outlet, Solarzoom reported that polysilicon prices have hit all time high of 150 RMB/kg which is almost three times the Q2 2020 price!

Initially, the problem was only a temporary delay in supplies as factories had to shut down when the coronavirus pandemic first hit. Although the production is back to normal now, the new surge in downstream demand has driven the polysilicon situation to a crisis point.

“There is a storm of supply and demand factors going on here. But basically, there is a new level of capacity demand that can’t be kept up with, everyone is facing the brunt of this crisis situation,” says Dany Qian, VP of JinkoSolar.

Some industry analysts have forecasted that these supply issues might continue at least until the second half of the year or even later because Q4 is traditional the peak season in China for project commissioning. Dany Qian, also highlighted another significant issue, stating that there is a serious imbalance in the pecking order when it comes to getting supply for the limited capacities of polysilicon.

The situation for Tier 2 panel manufacturers was a little worse. They had to cut their cell orders as panel sales fell due to the rising price. Unfortunately, they found themselves at the back of the queue when they tried to reorder as the market rebounded.

Mr. Daniel Liu, GM, South & Central Asia, JinkoSolar also shared his views, particularly about the Indian market – “Jinko has been the only global player that was able to steer through these raw material supply and price challenges without backing out from any of the signed deals with our Indian customers. We have a well-defined strategy for India as it is one of the largest and most price sensitive market globally. I would like to shun away some recent baseless claims as rumors, which implied Jinko not being able to honor its commitments to its customers. We have had an excellent track record in India having the best of the clients in our kitty. We saw a fabulous 2020 despite the challenges posed by the pandemic with over 1.2 GW of shipments to India. Moreover, JinkoSolar is the leading supplier to India in Q1 as per customs import data. This fact itself contradicts the false reports claiming Jinko to back out of orders. There will be an overlap, with demand peaking during Q4 in India too because of the BCD announcement from next year forcing developers to secure shipments by March 2022. This will further leave little or no room for price drops, but we are well equipped to face this challenge. Our focus and commitment to India will only grow stronger as we strive to bring the best products and technology to this market.”

The worst affected have been the Tier 2 and the non-vertically integrated so called ‘pure panel manufacturers’ simply because they were last to the party and were highly dependent on the upstream supply which went for a toss when wafer and cell manufacturers increased prices significantly. Industry giants like JinkoSolar, Longi, JA are spending billions of dollars every year on polysilicon purchase and this is only going to increase going forward as these major players ramp up capacity and increase their market shares globally. It is quite obvious that these companies will be the first choice for polysilicon suppliers and will always get preference in the pecking order, irrespective of market conditions, due to their scale and purchasing power.

It is evident that polysilicon shortage is here to stay for a while. There are no signs of its supply catching up anytime soon. Furthermore, this will cross over to the whole eco system and it is expected that Silver and Copper will also see upward price trends.

Industry experts and analysts following this situation very closely have concluded that price projections that we are getting today are probably the best and the lowest in the next 6-month timeframe or even longer. The smarter players out there are already capitalizing on this and partnering with the most credible module suppliers for their near-term capacity requirements.