Blog: Frank Heijckmann

01-10-2021

What can we expect in the coming quarters?

 

It is time to take you once again through the considerations that we at PVO are currently making. These are uncertain times and nobody knows exactly what is going to happen. Neither do we, but it is still worthwhile to list the most important indicators:

  1. The price of silicon and other semi-finished products has been rising again these past few weeks. It seemed to be going in the right direction for a while, but it now appears to be increasing quite structurally. The price has risen to 212RMB per kg this week. That is only 5RMB away from the highest price that was reached in June this year.
  2. China has announced that it will realise 100 GWp (!) next year, mainly by stimulating rooftop projects. With a total production capacity of about 200 GWp, this only leaves about 100 GWp for the rest of the world. If what China says is true, demand will continue to exceed production. It should be noted that previous forecasts coming from China have often failed to materialise. But even if China were to lag behind, I don’t expect a production surplus. Many projects have been put on hold until next year and in several countries, including Europe, demand continues to rise.
  3. In my opinion, the greatest uncertainty lies in developments surrounding transport costs. I hear and read different opinions on this. The common thread is that there is uncertainty and that costs will not be falling in the short term. This has such relevance at the moment because the transport costs are about € 0.035 per Wp and halving those costs would have a major impact on the price of a panel. I expect that there might be a slight fall in Q1 and a stabilisation in Q2. Transport costs could perhaps normalise thereafter, but that is far from certain. The pressure that the Chinese and American governments are putting on shipowners seems to be having little effect for the time being. They consider these high costs undesirable and an undermining threat to future economic growth. The question remains whether it will have an effect and when.
  4. The latest news is that China has announced that it will be shutting down solar plants for several weeks due to energy consumption and an exceedance of their CO2 emission limits. In China, the high price of coal and gas has even been causing power outages. Reporting about this only comes out sporadically, but I hear from manufacturers that it will have a negative impact on the production of all the major manufacturers. No doubt there will be more news about this in the coming period.

The conclusion is that I do not expect a serious price drop in the upcoming quarters. This scarcity will persist and the price will remain high, at least until the end of the year. Taking a position for delivery in Q1 right now might not be unwise, since the price for Q1 is slightly lower than it is at the moment and the indicators show an increase rather than a decrease. At some point the price will fall again, but I don’t anticipate a drop in 2022 to the levels seen in July 2020.

 

Frank Heijckmann

Commercial Director PVO International