The Zhitong Finance App learned that Minmetals Securities released a research report saying that according to Zhihui PV, the module factory will increase prices by 2 to 3 cents/W next week. On the one hand, due to the manufacturer's vacation in February 2024 and the long vacation period in 2024, the supply of components was reduced and storage was accelerated. At the same time, the peak season of the industry gradually entered from March to April, and demand recovery was obvious; on the other hand, due to low prices in the industrial chain, a slight increase in the price of upstream raw materials led to a delay in component-side costs. The bank expects a slight increase in component prices as a probable event, but since oversupply is still a medium-term problem, the price increase may not be very obvious. This also means that prices in the industrial chain have basically bottomed out, and there is not much room for future decline.

Incident: According to Zhihui Solar, several distributors have received price increase notices from first-tier module companies. The increase for different components is about 2 to 3 cents/W.

Minmetals Securities reviews are as follows:

Prices in the industrial chain have basically bottomed out, and prices are expected to rebound slightly.

According to Zhihui Solar, the module factory is about to raise prices next week, by 2 to 3 cents/W. On the one hand, due to the manufacturer's vacation in February 2024 and the long vacation period in 2024, the supply of components was reduced and storage was accelerated. At the same time, the peak season of the industry gradually entered from March to April, and demand recovery was obvious; on the other hand, due to low prices in the industrial chain, a slight increase in the price of upstream raw materials led to a delay in component-side costs. Since 2023, prices in the industrial chain have been in a downward cycle. The price of modules has dropped significantly, from a high price of nearly 2 yuan/W to less than 1 yuan/W at present. The sharp drop in industrial chain prices has led to a marked decline in corporate profits. It can also be seen from the recently announced four-quarter performance forecasts for photovoltaic companies. Corporate profits are generally under great pressure. Under profit pressure, there is a strong desire to raise prices in the industrial chain. From the end of January 2024, prices of silicon materials, silicon wafers, and batteries increased slightly one after another, to exploratory price increases for components. The bank expects a slight increase in component prices as a probable event, but since oversupply is still a medium-term problem, the price increase may not be very obvious. This also means that prices in the industrial chain have basically bottomed out, and there is not much room for future decline.

First-tier companies seek price increases, and corporate profits may be better than expected.

With prices in the industrial chain falling rapidly, it is generally believed that first-tier enterprises are the main force in price reduction; second-tier enterprises can only follow suit; first-tier enterprises have the power to suppress prices to clear up the competitive pattern of the industry. However, in the current situation where losses are quite serious, first-tier companies are also choosing exploratory price increases to improve profit margins, and corporate profits may be better than expected.

Production schedules are gradually improving, and market demand may be better than expected.

According to SMM, there was a marked improvement in industry production schedules in March 2024, and some companies even increased by about 100%. According to Zhihui PV, the module production schedule in March is expected to rise to more than 50 GW. Although the module production schedule data is highly volatile, the overall trend is currently improving: 1) domestic projects will gradually start after a year; 2) India's “ALMM” has been suspended, and India's demand may continue; 3) Battery modules were removed well in February, and the recovery in demand in March was even more obvious. If calculated based on the 50GW module demand in March, the annual installed capacity is also 500GW, and the actual demand may be better than expected.

Risk warning: 1) Production schedules have declined too fast, causing demand to fall short of expectations; 2) Competition in the industrial chain has worsened beyond expectations, leading to a continuous decline in prices. 3) Geopolitical risks, trade frictions worsened beyond expectations.