Blog: Aryan Uthman

16-06-2021

Prices and availability: what to expect this summer?

 

Now that the ever-increasing price for silicon seems to have finally come to an end. We can expect the price for modules to drop and availability to improve. Right? No. Nothing could be further from the truth. What is going on?

Because the price of silicon has risen so fast and manufacturers were not sure of sufficient sales at these high prices, many manufacturers shut down production lines. What they surely had in mind is that when the demand for silicon falls, the price should also fall. In turn, the price of cells would fall and finally the price of modules. This would break the cycle and allow production to return to full capacity.

I think that was the thought. However, there is something going on that prevents these last two steps from happening. First, the pandemic caused major logistic problems. Second, the world demand for goods from China continues to rise. My expectation is the freight rates to continue to hit new highs and stay above their pre-pandemic levels in the longer term. Competition for ocean freight capacity has intensified as economies open up and companies seek to bolster their inventory.

What exactly do we notice from this?

  • We are experiencing more and more often that manufacturers want to ship goods; but there are no containers available and/or no space on a ship. This problem is getting worse by the week and is not yet resolved.
  • Due to a new COVID outbreak in Guangdong province, Shenzhen city is in lockdown. A large part of the inverters that are used in Europe are made there. Because the factories cannot produce at full capacity and the port is locked, I surely expect a shortage of inverters.
  • We see massive capacity problems in Rotterdam. This means that unloading, processing and transport takes longer.

As demand in Europe remains high; we see the panel pricing rising even more. This is due to the logistic problems, higher costs and declining production. We are now moving fast towards € 0.26 per Wp and we foresee a price of € 0.28Wp as a realistic scenario in the very near future. We understand the difficulty in accepting price increases on this scale. That means your customers will start to feel the effects of price increases or changes in product availability. Can we still deliver panels and inverters towards the end of the year? We are in the middle of a special year, that much is certain.

 

Aryan Uthman

Team Lead Sales Benelux