If we assume that module ASP is to maintain 95c and poly at $30 per kg, CSIQ will have tremendous margin advantage over JKS.
CSIQ: With processing cost down to 43c for module and cell in 1H and an assumption of GCL wafer at 34c, CSIQ could fetch a gross margin of 19% after they deplete all over-priced inventory.
JKS: With integrated processing cost heads down to 65c and poly at $30 (In last CC, they stated 65c at YE 2012, I assume that they were conservative), JKS is expected to have gross margin of 13% after depleting over-priced inventory.
One might argue that JKS will be more advantageous if poly falls back to $25. In that case, I would think GCL's wafer price falls back to 30-31c.
1) In terms of order acquisition, CSIQ manifested better ability in last two quarters.
2) In terms of technology advance, CSIQ has higher conversion efficiency on ELPS and modified selective-emmiter.
3) Historically, CSIQ looks shabby when they actually declare ER - they is always a lagging effect preventing earning achievement.
4) CSIQ is more diversified in georgraphical distribution as well as projects engagement.
5) CSIQ has a better balance sheet and expect to receive windfall payment from canada projects.
Stock movements have many vairous factors impacting - 1) hyping (with Nasdeq up to 2900, lots of high-tech moving up 20-30% after devastating news, it is no surprise that some solar move up despite US duty concern and Germany Fit cut impacting 2h).
But one may expect that the co-relationship between solar stocks may be re-adjusted after ER in march.
From the last paragraph of YGE's NR, it implies that YGE may not have adequate low-cost poly. Therefore, they cut the shipment.
On the contrary, the faster CSIQ deplenishes GCL's wafers, the sooner they could report ER on spot wafer basis. Therefore, they are happy to ship orders faster.
Syxuong Poly was at 1000MT in 2010 they completed 3KMT in Sept and are tareting a 6KMT by Sept 2012. I think you had a 25KMT. for 2012
Ody about your polysilicon list.
Have you looked in to Siliken Chemical? They produce polysilicon in Spain with thriclorosilane and FBR polysilicon(granular).
I havent found any updates regarding their capacity but these two old ones. But they have a good technology and I think they should be on your list as their cost should be low even if they have a small plant right now.
"The Spanish new entrant Siliken Chemicals also
feeds trichlorosilane into its fluidized bed reactors in
order to manufacture polysilicon granules. The parent
company Siliken had originally announced the start
of production already for the first quarter of 2009.
Problems with the equipment delivered, however,
meant that the company had to redo part of the distillation
unit and make adjustments to the reactor
design, reported Antonio Navarro, Chairman Office
Director at Siliken. The first new reactor wasn’t started
up until the end of 2010. Navarro still stated an
ambitious target, though: production costs should
come down massively from 35 US$/kg at a capacity
of 1,000 MT and electricity costs of 0.10 US$/kWh
this year to 20.90 US$/kg in 2014 at a 10,000 MT
plant obtaining electricity at 0.05 US$/kWh. A
decision on its location has not yet been made."
Photon article says:
Furthermore, Siliken plans on expanding its production capacity to 2400 tonnes in 2010 at the
same location. Simultaneously, the company is looking at possible locations for additional
production capacity increases, given that the company will expand its capacity to 4200 tonnes
in 2011, 6000 tonnes in 2012 and 9200 tonnes in 2013
OCI is not one of those companies, my apologies. If you check the list here you will find them out
Fine Silicon, sub of the Yingli is not on the list
Floppy, i think gcl wafer will be at market price with maybe a few cents discount for big customers with co-location. The reason why those buying wafers now have a wafer cost of 30 cents is because that's the market price. This price is not sustainable. Look for wafer pricing to normalize in the 40's as poly normalizes in the mid 30's.
Csiq will be more about growth based on attractive products rather than low cost through integration. Can be good roi, but i prefer integration. The pricing spreads are just too volatile.
Floppy, snake, I think you both are too aggressive on attainable price level. The most fundamental change going on is the severely reduced capex for poly. Down from $100 per kg for existing plants to $35. The point you miss is the asp coverage requirement beyond cash part of cogs. Considering total costs including roi for capital invetments acceptable to owners the poly asp target for old plants is around $55. For new plants this can be lowered to $33. This is what I call normalized price, i.e. the market price in supply/demand balance. In oversupply price can comfortably be lowered to $48 and $28 for old and new plants respectively. At those prices it is not a losing business, but no motivation to invest in it. At extreme oversupply prices can always be pushed to cash cost. If demand is very low at same time the price could get to cash cost of lowest cost producers, which is in mid teens. Opposite in shortage the price can rise quickly from normalised level. For this year I think we might transition to the normalised level of the new plants, a bit prematurely since there's no shortage. Mid to high 30's is a reasonable expectation. For wafer add for same reason .25 to the poly market price to get say mid .40's as normalized level even if cash cost is .14.
So my expectation for normalzed wafer market price is about twice the cash cost of the efficient producers. Thinking that GCL will keep selling a bit above their cash cost does not make sense. They cannot motivate that to their owner and banks. They must generate massive returns to get roi on the massive capex. Think of gcl as having a target price a bit lower than average peer due to lower cost. This will mean they set their price with same diff to market price, but their pricing will follow market as everyone else. Their mandate as everyone else is to maximze shareholder return on equity, not do charity for customers (boosted profits) and world (cheap cleen power). If they don't aim for this they won't retain their 6 billion usd market cap. I think rather than customer charity they'd like to do like LDK and add cell lines.
My feeling is that GCL's massive wafer capacity will be the dominant factor for this year. Although demand pic has been improved in some estimate, it is still over-capacity.
And, as long as GCL could achieve positive "incremental" margin by running extra step to produce wafer instead of selling poly into market, they will do it. If they are willing to sell 30-31c while poly was $25, so will they sell 34-35c when poly moves up to $30. Yes, wafer price should have been bottomed. But I doubt how much pricing it can be recovered. Nowdays it is cheaper to set up a wafer production line than cell line. Wafer pricing is structurely set at low level.
And I might say from those cost points, GCL might be willing today to sign contracts long term at $0.30 or less per watt average knowing the ability to reach those targets. CSIQ did mention they are working on long term contract deals target $0.30 or less.
Near term you may be right $0.30 for wafers is not sustainable however $0.35-$0.40 is. The $0.35 range is what SOL guided for Q4. Q3 contract wafe rmanufactureres ASP was higher than spot by about a nickel. It is likely you will hear $0.35+/- ASP again in Q1. However by sometime in 2013 I expect wafers to be at $0.30 or lower.
The market for wafers is changing. Most wafer manufacturers will produce their own poly and with energy subsidies in China the cash costs could be approaching $10/kg. This is a change from them buying Poly and gets it at a 66% reduction over todays costs. If they wind up buying some it will be under contracts at $25. With technology improvements the grams per watt may drop to 5 grams or less and processing will be around $0.15. That puts an all in cost of $0.25. After you remove the depreciation and subsidies on energy the true cash cost for a wafer could be closer to $0.17. This would suggest that $0.30 or less per wafers can be the new norm. GCL is close to the $0.20 cash cost today. The pure bread wafer producers under low volumes had Opex in the 3 to 4 cent range. This could drop under volumes to the 2 cent range. Add another penny or 2 for interest and they generate $0.06 in cash after expenses. on 2 or 4GW that is $120-$240M. For a GCL at 10GW, that is $600M.
The Poly producers in China should have a scaled cash cost around $10/KG when you subtract out the energy subisidies that lower energy costs by nearly $3.50/kg. This puts the $13-$14/kg cash costs down to $10/kg. That means a company like GCL could sell Poly at $20/kg and pull in $10/kg in cash. The only issues right now is utlization rates as they are builidng and ramping. When either they pause the new plant constructions and take advantage of full utilization or they get mass of scale such that 5KMT added is nominal when producting 50KMT or more, then yo could see Poly sold at $25/kg to module makers.
As I said, these costs are looking 6 to 12 months out for multiple companies and not just GCL.
"CSIQ has higher conversion efficiency on ELPS and modified selective-emmiter."
I don't know wft you are trying to say, but I do know that CSIQ panels yield suck compared to TSL and JKS in the Photon field tests.