According to SMM statistics, China's PV module production in October increased MoM. The operating rate of Chinese module enterprises in October was 55%, with a total production of 51.13GW, up 4.2% MoM. Among them, P-type module production was 3.96GW, down 16.46% MoM, accounting for 7.74% of the total production; N-type module production was 47.17GW, up 6.45% MoM, accounting for 92.26% of the total production. The operating rate of Chinese module enterprises in China in October was 58.4%, with a total production of 49.24GW, of which N-type was 45.6GW.
Entering Q4, the peak delivery period for procurement projects and the final rush for year-end shipment targets, each module factory increased its operating rate to meet order demand and strive to complete shipment targets. The operating rate of the top 10 module enterprises increased to 60%-70%, and the market concentration of modules increased to 78%. At the enterprise level, there were increases and decreases. The main reason for the increase was the concentrated delivery of downstream customer orders, while the decrease was due to the unsustainable low-price order grabbing strategy, worsening losses, and weak demand, forcing enterprises to reduce their operating rates.
In November, China's PV module production is expected to slightly decrease MoM. The operating rate of Chinese module enterprises in November is expected to be 54.68%, with a total planned production of 50.84GW, down 0.6% MoM. Among them, P-type modules are 2.17GW, down 39.6% MoM, and N-type modules are 48.45GW, up 2.7% MoM. The production share of P-type modules has dropped to 5%.
The main reduction in November comes from the production schedules of Chinese enterprises' overseas bases, while their production schedule in China is expected to remain flat MoM. Their PV module production in China in November is expected to be 49.23GW, of which N-type is 47.06GW. By technology route, the production share of BC modules is expected to increase steadily, PERC modules are gradually exiting the market with a share of less than 5%, N-type TOPCon modules continue to dominate the mainstream market, and the production share of HJT modules is expected to increase due to increased domestic delivery demand and overseas orders at year-end. The year-end delivery demand remains at a peak, supporting the overall production schedule, with a narrow decline.
At the end of October, the module market called for production cuts and price increases, but the year-end production and shipment strategies of various enterprises were difficult to unify. Some enterprises chose to significantly increase production to achieve the final target, while others chose to continue reducing their operating rates due to poor sales and the inability to bear the pressure of losses. According to SMM data, the full cost (including tax) of modules for strong integrated enterprises (externally purchased polysilicon, self-produced PV wafers, self-produced solar cells, self-produced modules) in October was about 0.728 yuan/W. Even after deducting cash expenses such as the three expenses (selling expenses, administrative expenses and financial expenses) and depreciation, the cash cost was still 0.69 yuan/W. Given the current actual delivery prices of modules in centralised projects at 0.65-0.68 yuan/W, the loss per watt of modules was 0.04-0.01 yuan/W. The gross profit margin under full cost was -12%, and under cash cost was -6.2%. Although polysilicon prices are expected to decline in November, the prices of silver paste, aluminum frame, and film are expected to increase, limiting the decline in full costs. In the current context of losses in PV wafer and solar cell prices, integrated enterprises face difficulties in achieving shipment targets and need to plan Q4 production based on their ability to bear losses. Therefore, some leading module enterprises are considering abandoning high production schedules and planning to significantly reduce operating rates in November-December to reduce losses and support stable module prices.
For specialized module enterprises, as they have the advantage of lower external purchase prices for solar cells, their full cost of modules is relatively lower than that of integrated enterprises. However, it is still around 0.69 yuan/W. Moreover, with the rising prices of auxiliary materials in November, the full cost is expected to continue to rise. Specialized module factories also differ in sales prices and market positioning, with more shipments at lower prices, so their loss levels may not necessarily be lower than those of integrated module factories.
In the context of difficult profitability and no increase in demand, most module enterprises choose to maintain or reduce operating rates to "weather the winter." However, strategies vary among enterprises, leading to a divergence in production schedules in mid-November. In December, module production schedules are expected to further decline significantly. Besides cost and loss factors, high inventory levels and the retreat of the peak delivery period will also force module enterprises to reduce production.
