(Updates with analyst’s comments from fourth paragraph.)
Oct. 11 (Bloomberg) -- Spot prices for polysilicon, the raw material used in most solar panels, posted its biggest weekly drop since June, signaling the industry’s slump may be deepening.
The average selling price dropped 5.8 percent to $43.78 a kilogram on Oct. 10 from a week earlier, according to London- based Bloomberg New Energy Finance’s survey of contracts conducted from Oct. 3. Multicrystalline solar cells, which are assembled onto panels, slid 4.1 percent to 70 U.S. cents a watt.
Manufacturers across the solar panel industry are slashing prices as Europe’s debt crisis helps curb demand in Germany and Italy, the biggest markets, and a tide of new polysilicon plants comes on stream in China. The shift in demand is crushing some companies that ramped up capacity as global panel installations jumped 135 percent in 2010, HSBC Plc said.
“The risk of bankruptcies in the sector looms ever larger,” HSBC analyst Sean McLoughlin wrote in an Oct. 7 note. “Momentum in Germany is fading.”
Tumbling polysilicon prices in the spot market suggest the photovoltaic equipment industry’s slump will extend into next year as producers adjust to slower demand, Katharina Cholewa, an analyst at WestLB AG said today in an interview.
“Current price drops in spot polysilicon are likely to already reflect oversupply concerns for the first quarter of next year,” she said. “Wafers makers with margins under pressure might ask to renegotiate long-term contracts,” she said. Six-inch wafers, a benchmark for components made from polysilicon, declined 3.3 percent to $1.74.
Goldman Sachs Group Inc. last month reduced its panel demand forecasts for the second half by 18 percent as the debt crisis roiling European banks curbs the supply of finance for projects. The firm also lowered its outlook for next year 10 percent to 21 gigawatts, according to a Sept. 19 note.
Renewable Energy Corp. ASA, Europe’s second-biggest polysilicon maker, fell as much as 8.9 percent and traded down 8.2 percent at 4.67 kroner in Oslo at 3:46 p.m. European time. REC, which has lost 73 percent this year, has avoided building up inventory and has sold all of its output so far this year, Chief Executive Officer Ole Enger said yesterday.
“In these markets you can’t guarantee anything,” he said in an interview.
Polysilicon has tumbled by 45 percent since reaching a peak in March. Demand for panels collapsed in the second quarter after Germany and Italy cut subsidies for solar energy. Prices had hovered around the $50 mark since the end of June for buyers that have not acquired the material under long-term contracts.
“Although 90 percent of the market is under contract, recent bankruptcies have taken some of the buyers under these contracts out of the market and released more product to the spot,” Jenny Chase, head of solar analysis at BNEF, said today by e-mail.
Suntech Power Holdings, the world’s biggest solar-panel maker, fell as much as 4.4 percent in early trading in New York and traded down 4 percent at 9:55 a.m. local time. Canadian Solar Inc. lost 3.1 percent and LDK Solar Co. slipped 3 percent. The S&P 500 was 0.3 percent down.
--Editors: Todd White, Tony Barrett
To contact the reporters on this story: Marc Roca in London at firstname.lastname@example.org; Ben Sills in Madrid at email@example.com
To contact the editor responsible for this story: Reed Landberg at firstname.lastname@example.org