East China Companies Returning To Work
The companies in the solar energy industry are mainly clustered in Jiangsu, Zhejiang, and Jiangxi provinces.
As China is the global manufacturing base for the solar energy industry, more than 80% of polysilicon, 95% of wafers, and 90% of PV cells and nearly 100% of solar glass are all made in China.
The governments of the three provinces mentioned have announced that the Chinese New Year holiday will be extended to Feb. 9 at the moment. Some companies that take a more proactive approach to the situation are already considering to further prolong the holiday.
The key lies in the production and deployment capabilities of manufacturers.
The fact that the outbreak happened to occur during the Chinese New Year has led to the following circumstances: The manufacturers that suspended their operation prior to the CNY remain suspended, while those that remained operational continue their production steadily.
This is particularly the case for the industries with less flexible production lines, such as polysilicon, wafers and the glass for module packaging. It is customary that they maintain stable capacity for manufacturing during the Lunar New Year.
These products may be in excess supply in the future.
The Supply Chain Status of Wuhan S&T Cluster
There are only a handful of PV equipment or material suppliers located in Wuhan.
According to EnergyTrend’s preliminary estimate, the situation in Wuhan is not likely to have a significant impact on these companies.
The main reason behind this is the timing: the outbreak occurred during the CNY. The volume of the shipment tends to be low.
Furthermore, the suppliers of the equipment work with the manufacturers on installations. Therefore their operations do not take place in Wuhan.
Future Outlook
The overseas demand, as in India, Japan, Central and South America, and Australia, in 2020Q1 is higher than the demand in China.
The overseas prices of modules may be affected in February.
Regarding the issue of whether overseas demand could be met in a timely manner, the Wuhan situation also has little effect on the issue.
Because a lot of orders have already been signed. Only the deliveries of the goods are done in batches.
The delayed deliveries due to the epidemic in this quarter can still be mitigated.
As long as the deadlines of connecting to the grid are not affected, the situation can usually be alleviated in time in the next quarter.
However, it would be a different story if the outbreak continues to expand and extend.
The manufacturing capacity of PV cells, in particular, plays a pivotal role here. The cell production is suspended for now.
China’s capacity for manufacturing the cells, including that of Jiangsu, Zhejiang, Jiangxi, may account for more than one-third of the global capacity.
When exactly the companies in the three provinces can resume their operation will be the main criterion of determining the extent of the epidemic’s impact on the solar supply chain in the future.
Source: energytrend
