Xingxue Tong, president and COO of China-based integrated solar firm LDK Solar, has recently boldly predicted a rebound of the solar market in 2-3 weeks despite the general pessimistic view.
Tong stated that although demand has been stalled due to the ambiguous incentive policies of Germany and Italy, the overall demand of the first quarter in 2011 showed growth compared with the same quarter in 2010. The aggressive capacity expansion for solar cells has led to pessimistic predictions of the market, but inventory build-up in the Europe market has decreased recently, which he predicts will lead to demand increase in April and May.
Tong said that the recent view from both China and Taiwan on the solar market has been bleak, but the overall demand so far in 2011 has actually increased. The bleak view is prompted by solar cell oversupply that has caused some manufacturers to lower their capacity utilization.
He explained that the solar market is at an upturn from a trough in the first quarter, the traditionally low season where installations are easily swayed by weather conditions. Similarly, the weather condition in the second quarter will help to increase installations.
In addition, many solar system projects need to complete installation in 2011. Despite the changes in the policies, these demands have to be met. Lastly, the inventory build-up in Europe also caused concerns over the market. But the build-up was eased in February and March, and therefore, the LDK president anticipates demand to rebound in April and May and hopefully will reflect on orders for solar cells and modules.
Predicting against the market, Tong suggests spot price for polysilicon will revive soon. He comments that the overall solar market should be more optimistic, especially when the supply of polysilicon (poly-Si) and wafers is limited compared with the downstream of the supply chain. Since there are no oversupply problems of polysilicon and wafers, the prices of both have been relatively stable. Therefore, when the end market rebounds, the price of the polysilicon will also reflect this trend.
Tong stated if the spot price of polysilicon is within US$100/kg, the price should not be considered overpriced. Also, wafer price relates positively with polysilicon price, so the room for decrease is also limited. The recent decrease in prices across the supply chain, such as cells and modules, has reached a turning point with little room to go further. But in the long-run, the possibility of further decrease in prices of cells and modules still exists due to expansion of polysilicon that allow firms to lower costs.
Tong said the German and Italian governments’ moves to decrease incentives are an indication that they think there is room for more cost-down of the solar industry, and therefore decreased incentives should help the growth of the market. This also relates to these countries’ reactions to subdue nuclear energy development in the wake of the nuclear crisis in Japan.
