This reshuffle, which began in the second half of 2023, has been going on for a year now.

The four major links are still not profitable, the blood loss of a wide range of enterprises has not changed, and the entire photovoltaic industry is still struggling to move forward at the bottom. When will spring come to the PV industry? The whole industry is asking as it goes.

At the same time, Huaxia Energy Network & Huaxia Photovoltaic (public number hxgf3060) noticed that from overseas emerging markets to domestic application terminals, from industrial ecology to manufacturing, some signals have actually been transmitted to inspire the industry.

To paraphrase a sentence from Zhong Baoshen, chairman of LONGi Green Energy, in the recent CCTV "Dialogue" column, perhaps the "39 days" of the industry have passed, and the next will not be colder than the "39 days"!

United States markets are not closed, and emerging markets have a lot to offer

On October 1, the United States Department of Commerce announced its preliminary ruling on the countervailing duty (CVD) investigation of crystalline photovoltaic cells (whether assembled into modules or not) from four Southeast Asian countries (Cambodia, Malaysia, Thailand and Viet Nam), adding some hope to the prospects of Southeast Asian PV in the shadow of the double anti-dumping stick.

With the exception of four Viet Nam factories (Shengtian New Energy, Haitai New Energy, Green Power, Vietnam Green Energy) with a preliminary countervailing duty rate of 292.61% and three Malaysia factories (Paga New Energy, Sanmai Energy, and Pax union Resources Sdn Bhd) with a tax rate of 123.94%, the other tax rates are below 70%. In general, most of the enterprises facing high tax barriers are small and medium-sized enterprises. For factories Malaysia by leading companies such as JinkoSolar (SH:688223), the tax rate is 3.47%; JA Solar Technology Co., Ltd. (SZ:002459) Viet Nam factories with a tax rate of 2.85%. Trina Solar's (SH:688599) Thailand plant is only 0.14%.

JinkoSolar also recently replied that the recent ruling shows that the ACVD (countervailing duty) tax rate is low, and the tax rate of most leading companies is around 0.3%, which will not have a significant impact. The AD (anti-dumping duty) rate may be slightly higher, "but it will not reach the rumored 100% or 200%, and the final landing tax rate is expected to be in the range of tens of percentage points."

In this regard, Lv Jinbiao, deputy director of the silicon industry expert group of the China Nonferrous Metals Industry Association, explained that the reason why different corporate tax rates are different should be related to the different amounts of subsidies disclosed by the surveyed enterprises in the countries where they are located. "To a certain extent, this reflects that in Southeast Asia's production capacity, those giant companies with a higher degree of marketization have more advantages in the face of US countervailing investigations." Lu Jinbiao said.

Infolink, a research institution, believes that the four Southeast Asian countries have long been the main source of batteries for United States, considering that the current United States battery production capacity has not been put into large-scale production, and the battery supply of the four foreign countries in Indonesia, Laos and other places cannot fully supply United States module. Overall, under the optimistic expectation of insufficient battery supply and low double reverse tax rates, it is expected that the United States will still have the opportunity to import batteries produced in four Southeast Asian countries to meet local terminal demand.

In order to keep orders from the United States market, many companies have started to build factories in the United States. According to Jinko in August, its 400MW old production capacity in the United States has successfully obtained IRA subsidies.

In addition to the United States market, emerging markets such as Asia, Africa and Latin America are also emerging.

LONGi Green Energy (SH:601012) recently said that emerging markets are currently in a rapid growth momentum, especially in the Asia-Pacific, Middle East, Africa and Latin America. JinkoSolar, which accounted for 70% of overseas shipments and revenue in the first half of the year, recently told investors that the rapid growth and strong prices in the Middle East in recent years have had a positive impact on JinkoSolar's performance. In 2024, emerging markets such as Pakistan, Thailand, the Middle East and Central Asia will also show significant growth (see Huaxia PV's previous report: "Pakistan with "lack of electricity" is crowded with Chinese PV companies).

The terminal demand was released, and the quantity and quality of centralized procurement bidding were improved

Since the beginning of this year, although the industry has had a capacity mismatch problem. However, the demand in the domestic end market has maintained growth. As the largest purchaser of photovoltaic equipment, the central state-owned enterprises continue to increase their procurement of photovoltaics.

According to incomplete statistics from Guojin Dianxin, as of September 24, the collection and procurement, bid opening, and calibration of large-scale modules of central state-owned enterprises in 2024 will be 176GW, 228GW, and 121GW, respectively, up 23%, 97%, and 8% year-on-year, respectively.

Among them, the tender volume in August increased significantly to 64GW, a surge of 611% month-on-month and a year-on-year increase of 233%. Among them, China Energy Construction, Huadian, Huaneng and State Power Investment Corporation have a total of more than 60GW.

In September, although module bidding cooled down to a certain extent, with 12.75 GW of bidding volume and 9.52 GW of centralized procurement, it ushered in the peak of bid opening. China Energy Construction, Huadian, Huaneng and alone opened bids with a whopping 63.5GW.

At the same time, the industry is also expected to be optimistic about the end demand in the next four quarters.

On the one hand, this is related to the demand for the completion of the project by the end of the year; On the other hand, the recent national renewable energy development and construction scheduling video conference held by the National Energy Administration has also released a major positive. The meeting demanded that the development and construction efforts should be intensified, and the hard tasks such as the wind power and photovoltaic base project, transmission channels and power grid access capacity should be further implemented, so as to make up for the shortcomings facing the development of new energy. Judging from this, the construction of large bases in the fourth quarter is unprecedented, and the installation and grid connection will be unprecedented.

In addition, the terminal "peak season" may drive the volume and price repair of the module industry chain.

It is worth mentioning that at the same time as the centralized procurement bidding is increased, the central state-owned enterprises have begun to seek long-term and stable supply enterprises to protect the safety of state-owned assets.

On July 18, the State-owned Assets Supervision and Administration Commission of the State Council and the National Development and Reform Commission jointly issued the "Guiding Opinions on Standardizing the Procurement Management of Central Enterprises", which requires that in the bidding of central enterprises, "improve the internal control and supervision mechanism of enterprises to prevent the loss of state-owned assets", "optimize suppliers, contractors or service providers with the goal of the best performance-to-price ratio and the best comprehensive cost of the whole life cycle", "make full use of digital and intelligent means such as the national enterprise procurement transaction sourcing and inquiry system, extensively carry out sourcing and price comparison, and effectively identify suppliers who are cheating, collusive quotations, insufficient performance capacity and other risks, and carry out full life cycle assessment".

A series of expressions mean that "high-quality standards" have become the bidding conditions, and the phenomenon of winning bids at low prices will be reversed, affecting the industrial chain, that is, the core of future market competition is the competition of high-quality products and core technologies, which is conducive to the high-quality development of the industry.

The market ecology is improving, and upstream prices are rising

In the second half of the year, although the photovoltaic industry has not yet come out of the dilemma that none of the four major links are profitable, the industry ecology and corporate mentality are quietly changing.

The most obvious is the silicon wafer link. On August 27, LONGi Green Energy and TCL Zhonghuan (SZ:002129) both officially announced wafer price increases. After that, other wafer companies such as Gaojing Solar and Shuangliang Energy Conservation (SH:600481) have raised prices. Affected by this, the average prices of NG10 and NG12 wafers announced by the Silicon Industry Branch on August 29 also increased by 2.78% and 0.80%.

The previous contrarian expansion and price war caused heavy losses in the wafer sector. However, after the change of CEO in early August, TCL Zhonghuan began to make an emergency turn, and one of its actions was to shrink the production line: the operating rate was lowered from 95% in July to 60%-65% at the end of August, and to 50%-55% in September. Affected by this, domestic silicon wafer production fell by 15.76% month-on-month to only 44.31GW in September. Wafer supply is about 5GW less than downstream demand. The silicon industry branch specifically mentioned that the reduction in September mainly came from first-tier enterprises, accounting for about 84% of the total reduction. The second action is to raise wafer prices.

TCL Zhonghuan's two major actions reflect that the previous business strategy of grabbing market share by launching a price war has been abandoned. With TCL Zhonghuan's own statement, that is, "we are actively promoting and participating in the ecological construction of the industry, reducing vicious competition, and promoting the rational recovery of product prices, which is conducive to the healthy development of the industry and the long-term interests of industrial participants." ”

However, although the leading enterprises have a strong willingness to increase prices, it is still difficult to transmit price increases to downstream links. Throughout September, wafer prices were basically flat except for the 2.94% increase in the average price of P-type G12 wafers in the first week.

In addition, according to the recent forecast of the Silicon Industry Branch, with the arrival of the peak demand season in the fourth quarter, wafer manufacturers have obvious signs of production recovery. This may mean that wafer prices are expected to rise in the fourth quarter.

In addition to wafers, polysilicon prices also saw a collective increase of 0.02%-0.06% in the first week of September. Recently, Tongwei Co., Ltd. (SH:600438) mentioned in the record of investor relations activities in September that in the short term, polysilicon prices have ushered in a slight rebound after stabilizing for many weeks, which confirms that the upstream and downstream of the industrial chain have reached a basic consensus on the price bottom, but before the supply and demand situation does not improve significantly, polysilicon prices are likely to maintain stable operation in the short term. Tongwei also predicts that with the advent of the dry season in the fourth quarter, the cost of electricity will increase, which will lead to an increase in the production cost of industrial silicon and polysilicon, and the supply and demand pattern will improve, and the price is expected to continue to rise slightly.

The production line was reversed, and the production schedule of many companies was raised

In the second half of the year, some companies also reported that the operating rate was raised. For example, Aixu's Yiwu base has a large number of recruitment news.

Aiko (SH:600732) said in its August investor relations activity sheet that the ABC project in Yiwu is preparing to increase production capacity due to the fact that the demand for order delivery has indeed increased, so it is recruiting personnel to ensure product delivery. At the same time, Aiko expects its shipments to accelerate growth from August, and the domestic growth will be faster in the fourth quarter, and the growth of shipments in the domestic market will be faster than that in the foreign market. After the rebound from the third quarter, the company's products have the opportunity to break away from the industry cycle and take the lead in achieving full production and full sales.

It is worth noting that Aiko also mentioned that the company's PERC cells have been at full production and full sales, and orders are also full by the end of this year, and orders are expected to decrease next year. And judging from the current profit situation, the sales of PERC products are better than those of TOPCon products.

Aiko is not the only one that has increased production capacity. In the September investor relations activity record sheet, LONGi also said that in the third quarter of 2024, its module production schedule was raised for three consecutive months, mainly due to the company's abundant module orders in the second half of this year. LONGi also said that shipments in the second half of the year will be significantly higher than in the first half.

On October 15, JA Solar Technology (SZ:002459) also said in an investor relations event that the fourth quarter is the peak season of the photovoltaic industry, the company is full of orders, and the team will strive to reduce costs, increase production utilization rate, and strive for more product shipments under the condition of ensuring the company's cash flow security and maximizing benefits.

According to JinkoSolar's forecast, after the second quarter of next year, due to factors such as the expansion of losses and the increase in financing pressure of some enterprises, it will lead to the adjustment of operating rates or the withdrawal of enterprises, so that the supply and demand of the industry will reach a reasonable level.

In the face of the current difficult predicament of the photovoltaic industry, from the government level, industry associations to leading enterprises, they are exploring the direction of passing through the cycle from different angles.

After the seven photovoltaic bigwigs collectively visited CCTV's "Dialogue" column (check the previous article of Huaxia Energy Network: "Torture China PV: How can we "not waste this crisis"?) On October 14, the China Photovoltaic Industry Association held a symposium in Shanghai to prevent the industry's "involution" vicious competition, and 16 companies were invited to participate in the symposium on "strengthening industry self-discipline, preventing 'involution' vicious competition, strengthening the market survival of the fittest mechanism, and unblocking the exit channels of backward and inefficient production capacity" and the healthy and sustainable development of the industry, and reached a consensus. In addition, the meeting also discussed around the production and price limit, although no consensus has been reached, but all parties are actively promoting the arrival of the industry's turnaround.

The

PV industry has gone through multiple cycles, and the crisis it is facing today also contains opportunities. In the context of global energy transition, the demand and growth of the photovoltaic market space in the future can be determined, although the development path has twists and turns, as long as the industry has firm confidence and enhances its core competitiveness, it can pass through the cold winter and meet the arrival of spring in the industry.

(Please indicate the source for reprinting, article source: Huaxia Energy Network, WeChat ID: hxny3060).

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