First-tier solar cell makers in Taiwan are quoting US$1.40-1.42 for November contracts, which is roughly the same as October, while second-tier players are looking to raise prices modestly by US$0.02, according to industry sources. Their solar module and system customers, especially those based in Germany, reportedly have rejected the quotes and warned that without price cuts, there will be no orders.

Both first- and second-tier solar cell makers have openly commented that fourth-quarter orders and capacity utilization have remained strong. Combined with an incremental rise in solar wafer costs, they see little reason to drop prices, the sources said. Additionally, Germany-based customers made similar demands for October contracts, and the solar cell makers already gave in once, the sources revealed.

Module and system companies are citing weak demand in the fourth quarter despite the German government scheduling another feed-in-tariff (FIT) cut for January 2011. To beat the next round of incentive reduction, installation orders should be coming in now, the companies indicated. With the German government having already slashed FIT recently and solar cell quote hovering at a high level, it has been difficult for system companies to lower price to raise investment return and stimulate demand.

Module makers pointed out that if the German government lowers FIT by 13% in January, solar cell prices need to fall about 10% to maintain demand. Without an agreement for November quotes, price trends for December and the first quarter of 2011 are still unclear.

European module and system companies procure a large percentage of their solar cells from Taiwan-based suppliers. With government incentives falling and cost buoyed, the European companies are losing competitiveness to their counterparts in China, which is not good news for Taiwanese solar cell makers.

Although China is also a big market for Taiwan-based solar cell companies, their Chinese customers are vertically integrated and have been very aggressive in expanding their own solar cell capacity, the sources said.

At the recent PV Taiwan exhibition, executives from cell makers mostly indicated strong demand for fourth quarter. Motech Industries CEO Chang Peng Heng said that cell prices will remain at a high level into December, while Gintech Energy chairman Wenant Pan pointed to full utilization throughout the fourth quarter. Neo Solar Power chairman Quincy Lin stated that the company is bullish on the solar cell market and expects a 20% growth in 2011.