Downfall in Solar Wafer Pricing, Despite Inventory Boost Amidst Factory Slowdowns

The Chinese solar wafer market has faced a downward trend for two consecutive weeks. Prices for Mono PERC M10 wafers and n-type M10 wafers have fallen to $0.138/pc and $0.137/pc, marking a weekly drop of 4.17% and 2.14%, respectively. Similarly, Mono PERC G12 wafers and n-type G12 wafers have dropped to $0.196/pc and $0.188/pc, showing declines of 4.39% and 2.59% on a weekly basis.

Despite market challenges, leading solar wafer producers have implemented price hikes in the past few months. However, the overall pricing trend has been weakened due to upcoming market shifts. The decreasing demand for 182mm and 183mm wafers has triggered an increase in wafer stockpiles, now reaching 4 to 5 billion pieces (approximately 35-40 GW). This stockpile rise reflects the ongoing challenge of balancing excess inventory in the solar wafer market.

In response, top wafer manufacturers have announced price reductions and have rushed to dispose of inventory in an attempt to recover capital. Reports suggest that n-type M10 wafers are now retailing for as low as CNY 1/pc ($0.124/pc), indicating a further price decrease in the near future.

As we move into Q4, wafer production units may face additional pressure, which could lead to cost-saving measures such as salary reductions and employee terminations. Additionally, manufacturers are curtailing inventory by slashing rates and implementing price cuts. One prominent wafer producer, known for maintaining high operational rates, has reportedly reduced its production rate to below 40% and anticipates it will dip to around 30% in November—an unprecedented low that will place them beneath some Tier-2 manufacturers.

Reports suggest that most wafer companies are likely to see their operational rates dip to an average of 30% during the current quarter. The severe production slowdown has also led to negative publicity for solar wafer manufacturers. Legal records show multiple lawsuits filed in October related to labor disputes and reparation matters within the sector.

On the other hand, the U.S. solar market is experiencing positive legislative advancements. The U.S. Department of Treasury issued a clarification last week, categorizing solar ingots and wafers as part of semiconductor manufacturing. This change qualifies them for the 25% Advanced Manufacturing Investment Credit. This tax credit can be combined with other benefits, including deductions from the Inflation Reduction Act.

Additionally, the U.S. Department of Treasury finalized the guidelines for the 45X Advanced Manufacturing Production Tax Credit, offering reductions based on annual sales of eligible products. With a fixed rate of $12/m2 for wafers, and the requirement for U.S.-made ingots, this development is seen as a key move to foster investment in U.S. solar manufacturing. The incentives are expected to boost the growth of the solar industry and drive more projects within the U.S.

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