Tightening supply of quality solar wafers due to booming demand for PV modules could see the return of contract trading by wafer producers, according to market research firm, EnergyTrend.
Strong wafer demand in the fourth quarter is expected to continue into the first quarter of 2014 as demand in China, Japan and other key markets grows, impacting the ability of wafer suppliers to keep up with demand especially for high-efficiency wafers used for residential markets.
EnergyTrend, a division of Taiwan-based TrendForce, said that smaller wafer producers with better technology had primarily returned to full production and been able to raise prices, a trend is said could continue.
Demand for mainstream multicrystalline wafers remains unabated, with prices since October 2013 increasing by 5%, EnergyTrend said. As a result, wafer manufacturers were said to be considering short-term contract trading.
Wafer producers were hit hard during the last two years of chronic overcapacity with many smaller players around the world closing down completely, while larger producers cut production well below 50%. As a result, few if any established players have added capacity during the timeframe, creating tight supply as end market demand is expected to exceed 35GW in 2013.
China-produced polysilicon prices have also remained high with several key players such as GCL-Poly and Daqo sold out through into next year and new capacity plans or ramps taking time to implement.
EnergyTrend said that spot and auxiliary material supply was declining, though prices only reached US$17.046/kg, a 0.01% rise compared to the third week of November.
Tight supply of multi-c-Si wafers in China has meant some of the China-based suppliers had reduced quantities to Taiwanese cell/module manufacturers, with the average price reaching US$0.902/piece, a 0.11% rise.
Solar cell prices were also said to have risen in recent weeks with the average price reaching US$0.39/watt, a 0.26% rise in China/Taiwan.
The majority of integrated Chinese PV manufacturers are currently adding module capacity whether by incremental upgrades, notably automating module assembly lines to boost productivity and throughput, or through further outsourcing of production, while holding back on wafer and cell capacity additions to reduce capital expenditure commitments until many return to multiple-quarterly profitability, after two years of losses.