Prices for crystalline silicon wafers look set to rise, as several cell and wafer producers warning of a supply bottleneck, according to analysts IHS. A shortage of tariff-free PV cells in the U.S. market is also likely, on the back of strong demand.
The average utilization rate of tier 1 wafer producers worldwide this year is forecast to exceed 90%; however, most of these producers will be sold out until the end of the year, and some will be sold out through the second quarter of 2016, writes IHS Jessica Jin and Edurne Zoco.
The high efficiency end of the market looks likely to be the most severely affected, IHS analysis reveals, with a large proportion of downstream arrays requiring modules with an output of 255 W or higher.
Today's IHS report echoes analysis published last week by Taiwan's EnergyTrend, and confirmed by GTM Research, that showed that demand for multicrystalline wafers and cells is currently exceeding supply.
IHS sets out a number of factors behind the potential wafer shortage: Wafer capacities have not kept pace with module expansions, due in part to the capital intensive nature of wafer production capacity expansion; vertically integrated producers have increasingly opted to purchase wafers off the market rather than produce in house; polysilicon trade barriers for importation into China will likely limit wafer production; and consolidation within wafer production has seen older capacity retired.
In 2016, IHS forecasts a wafer production shortfall of around 5.5 GW, with only GCL (1GW) and Longi (500 MW) having announced capacity expansions of the top 10 producers. The gap between wafer supply and demand could even increase throughout the year, as China targets a further 5.3 GW in PV installations to be completed by June 2016.
IHS has observed wafer prices rising since June of this year. While this is good news for wafer producers, with polysilicon prices remaining relatively subdued delivering healthy margins, it will likely see end market price increases.
The IHS forecast for 2015 is for 58.7 GW of solar to be installed, with that increasing by 12% in 2016 to 65.5 GW. Price increases have been observed in the module market, with that now flowing on to cell and wafer producers and finally to polysilicon producers.