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According to information released by multiple industry organizations, leading silicon wafer companies took the lead in reducing production this week.

Securities Times e-company reporters learned from multiple industry insiders that the major silicon wafer manufacturer that reduced production this week was TCL Zhonghuan, with its operating rate falling to 70%; however, a person from TCL Zhonghuan told reporters that the company's operating rate was slightly adjusted, (but the reduction) was not that exaggerated.

The reporter learned that the silicon wafer operating rate of another major silicon wafer manufacturer, Longi Green Energy, has not changed much. Industry insiders also told the reporter that Longi Green Energy has increased production but the load is still not high.

It is worth noting that in the past, the Silicon Industry Branch of the China Nonferrous Metals Industry Association would release the industry's silicon wafer operating rate every week while releasing the industry chain prices, but this week this data was rarely "absent". For reference, last week, the operating rates of the two first-tier companies remained at 55% and 95% respectively. Regarding the fact that the Silicon Industry Branch did not disclose the silicon wafer operating rate this week, industry insiders reported that it was because it was considered that it would affect the companies, so the relevant data was not released.

An important background for the production cuts of silicon wafer manufacturers is the continued decline in silicon wafer prices. According to data from the Silicon Industry Branch, silicon wafer prices fell significantly this week. Among them, the average transaction price of N-type G10L monocrystalline silicon wafers was 1.08 yuan/piece, a month-on-month decrease of 6.5%; the average transaction price of N-type G12R monocrystalline silicon wafers remained at 1.25 yuan/piece; the average transaction price of N-type G12 monocrystalline silicon wafers was 1.5 yuan/piece, a month-on-month decrease of 6.25%.

There are many reasons for the sharp drop in silicon wafer prices this week. The Silicon Industry Branch pointed out that previously, the premium ability of large-size silicon wafers has significantly weakened (calculated on an equal-area basis), resulting in a relatively high concentration of silicon wafer inventory. This week, leading companies cut prices to accelerate inventory clearance, which directly led to a large drop in large-size silicon wafer prices. In addition, after two weeks of rising silicon material prices, this week began to stabilize, and the support for raw material prices has gradually weakened.

The prices of silicon wafers and batteries also kept pace with each other. This week, the price of M10 monocrystalline TOPCon battery pieces dropped to 0.27-0.285 yuan/W, a month-on-month decrease of about 6.5%, which was basically in line with the decline of silicon wafers. The further decline in battery prices has affected the expectations of silicon wafer companies to stabilize prices, and shows that the bargaining power of silicon wafers is not strong at present.

Industry organization InfoLink pointed out that in the silicon wafer market, the dual pressure of rising silicon material prices and falling cell prices has made it difficult in the four main industry chain links. Although the market has heard that leading companies have plans to reduce production, the actual operating rate changes are expected to begin to appear in September. The supply and demand relationship in August is still unstable, and it is expected that the silicon wafer price trend will still have a downward trend.

There is no doubt that the impact of the production cuts by large silicon wafer manufacturers is the focus of the industry. In the past two weeks, the price of silicon materials has shown a slight upward trend. If the production cuts by large silicon wafer manufacturers are implemented, it will inevitably affect the demand for silicon materials, and there are doubts about whether the price of silicon materials can continue to rise. Industry data has indeed confirmed this concern.

According to data from the Silicon Industry Association, polysilicon prices remained stable across the board this week. Among them, the average transaction price of N-type rod silicon was 41,000 yuan/ton; the average transaction price of single crystal dense material was 34,300 yuan/ton; and the average transaction price of N-type granular silicon was 36,700 yuan/ton.

The Silicon Industry Branch pointed out that from the perspective of polysilicon companies, downstream crystal pulling companies currently have a certain amount of raw material inventory, and the operating rate has been reduced. Only some companies that maintain high operating rates and companies with product export needs are more active in purchasing goods and are able to accept a certain degree of price increase. The reason why prices remained flat this week is that companies are coming to the end of signing orders this month and market transactions are relatively limited; second, the expectation of downstream crystal pulling production cuts has intensified. In the absence of further price increases by leading silicon material companies, the remaining companies are mostly striving for parity transactions.

Overall, the domestic polysilicon supply (including imports) is stable at a low level. In terms of demand during the same period, although there is an increase in demand such as traders stockpiling and downstream companies replenishing their inventories, the plan of some large silicon wafer manufacturers to reduce their operating rates to 70% to 80% will have a substantial impact on the current fragile supply and demand relationship.

InfoLink also mentioned that the move by silicon material users, especially some leading enterprises, to reduce crystal pulling operations starting from the middle of this month is expected to have a certain impact on the market. If other professional silicon wafer factories are also expected to reduce crystal pulling operations in September, it will undoubtedly have a significant adverse impact on the silicon material demand side. In addition, there is an expectation that some silicon material enterprises will end maintenance and increase operations and output in September, which may lead to a slight rebound in the new supply in September from the bottom, which may bring a new round of upward pressure on the supply-side inventory that has already declined significantly, and then it will be more unfavorable to the rebound momentum of silicon material spot prices.

Regarding the price changes in other downstream links, InfoLink pointed out that recently, the price trend of battery cells mainly depends on the decline in component prices, and the battery cell link lacks sufficient bargaining power. Only players who can produce ultra-high-efficiency battery cells can maintain bargaining power above the market level. The low-price segment of battery prices is still falling. At present, the price of low-efficiency battery cells and specific demand products, such as goods involved in moving goods to offset accounts, has fallen to 0.27 yuan per watt or less.

As for the component segment, there is no sign of a significant rebound in demand for the time being. The demand support point is the upcoming domestic large projects in August, and overseas demand is stable. Few people accept the offer and land. The market is still full of low-price orders, inefficient products, and inventory goods, which cause prices to fall and continue to disrupt the market rhythm. It is difficult for component prices to recover.

The above analysis shows that although the production cuts by major silicon wafer manufacturers will help ease market anxiety, the prices of the photovoltaic industry chain may remain sluggish in the short term. However, in the medium and long term, the industry is relatively optimistic.

The Silicon Industry Branch pointed out that although the prices of silicon wafers and batteries have fallen, the leading enterprises' first reduction in production is still positive for stabilizing all links of the industrial chain in the medium and long term. The load reduction of first-line enterprises has built confidence in the industry. After experiencing a short-term selling pain period, the market supply and demand will continue to improve in the medium and long term, and prices are expected to gradually stop falling. In addition, more than half of the inventory in the silicon wafer industry is currently concentrated in one or two companies. In the short term, the production plans of these companies will become the focus of market attention. In the medium and long term, as the production capacity of each link in the industrial chain is cleared faster, market prices are expected to return to reasonable levels.

Lv Jinbiao, deputy director of the Silicon Industry Expert Group of the China Nonferrous Metals Industry Association, talked about his judgment on the recent industrial chain situation in an interview with reporters. He believes that at present, the overall load of silicon wafers has not changed. The key is that the demand for photovoltaic terminals has not increased much, which has led to the loss of cash flow for integrated component manufacturers. They can only produce according to orders and dare not reduce inventory. In addition, the inventory of silicon materials itself is large and will not be balanced at present. It is necessary to continue to reduce the load to help improve the supply and demand relationship.

The reporter noticed that whether the price of silicon materials can be stabilized affects the nerves of the industrial chain. Industry insiders generally agree that if the price of silicon materials is stabilized at a reasonable level first, and the prices of downstream links are adjusted accordingly, the entire industrial chain may regain profitability. In this regard, Lv Jinbiao told reporters that the price of silicon materials is far from rebounding. "I have been calling for a reduction in the load of polysilicon, but some large factories have different considerations. Now the downstream links hope that polysilicon prices will rise, so that they can take the opportunity to increase to a situation where they do not lose money."