The Zhitong Finance App learned that Guojin Securities released a research report saying that the sharp drop in module costs is expected to drive continued growth in global PV installations and drive a boom in PV welding belt shipments. Global demand for welding belts is expected to be 273/322,000 tons from 2024-2025, an increase of 24%/18%. Advances in battery technology are driving up the iteration of welding belt products and increasing technical barriers. Against the backdrop of tightening overall financing in the photovoltaic industry, the gap between enterprises in terms of their ability to obtain external resources such as local government support and their own financial strength will widen. The welding belt market is expected to be concentrated at the head, and leading companies will improve their profitability with a first-mover advantage.

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The main views of Guojin Securities are as follows:

Photovoltaic welding tape: core auxiliary material for modules accounting for 6% of the cost, demand continues to grow

Guojin Securities pointed out that photovoltaic welding tape is used to connect solar cells and acts as a conductor. It accounts for about 6% of the module cost (according to the March 2024 price estimate), but the quality of the welding belt has a big impact on the efficiency, yield, and service life of the module. For example, a decrease in the thickness of the welding belt can lead to an increase in resistivity, which reduces the short circuit current and output power of the photovoltaic module; poor welding belt quality can increase the risk of hidden component cracking, increase the risk of false welding/overwelding, and reduce the module yield.

The sharp drop in module costs is expected to drive the continued growth of global PV installed capacity. Guojin Securities expects global demand for PV modules to be 676/806 GWDC, an increase of 28%/19% in 2024-2025. Driven by this, demand for photovoltaic welding belts will remain high. The global demand for welding belts is estimated to be 273/322,000 tons in 2024-2025, an increase of 24%/18%.

Industry trends: Advances in battery technology drive the iteration of welding belt products and raise technical barriers

Advances in welding belt technology mainly focus on improving its mechanical properties, and improving the power of photovoltaic modules by optimizing the surface structure, exterior size, etc. to match the battery technology route, reduce the resistivity of the welding belt, and increase the total amount of light received by the battery. Driven by the demand for cost reduction and efficiency, the average width of the interconnected welding belt has been reduced from 2mm in the 2BB era to less than 0.30mm in the SMBB era; 0BB (no main grid) technology can further reduce battery silver paste consumption. In the future, there is room for mass introduction into components such as TopCon and HJT. With the development of 0BB technology, the diameter of the supporting 0BB welding belt is expected to drop further below 0.20mm.

The thinning of welding tape will cause the tensile strength and yield strength of the welding belt to continue to decrease, and the requirements for accurate control of the tinning thickness, yield strength stability, concentricity, etc. of the welding belt will increase. As fineness progresses, technical barriers to welding belt production continue to rise.

In addition, diverse component products such as HJT components, xBc components, black components, and tile laminated components for differentiated markets have spawned demand for differentiated welding belt products such as HJT low temperature welding belts and xBc flat welding belts, and have also placed higher demands on the diverse R&D capabilities of welding belt companies, raising barriers to the welding belt industry.

Product iteration promotes increased concentration and drives the improvement of the profitability of leading companies

Guojin Securities believes that the welding belt process has the characteristics of a high proportion of raw material costs (over 90%) and a large share of working capital, and places high demands on corporate capital strength and operating capacity. Against the backdrop of the tightening of overall financing in the photovoltaic industry, the pressure on small-scale and weak cost control companies to survive and expand production is increasing. At the same time, considering the continuous increase in technical barriers in welding belt product iteration, the gap between enterprises in terms of their ability to obtain external resources such as local government support and their ability to expand production will widen.

Currently, the competitive pattern in the welding belt industry is scattered (estimated CR3 is about 34.2% in 2023). In recent years, leading welding belt companies with leading technology research and development capabilities, large-scale production capacity and financial advantages have actively expanded production, and the welding belt market is expected to be concentrated at the top. Historically, the profitability of leading companies improved markedly during the product iteration period. As new products with high technical requirements such as SMBB welding belts, 0BB welding belts, and low temperature welding belts accelerate penetration, head welders with deep technology accumulation and leading high-efficiency capacity layout are expected to improve profitability with a first-mover advantage.

Risk warning

PV installations fall short of expectations, risk of product substitution, and increased risk of market competition.