Silver skyrockets, photovoltaics weep.
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Spot silver staged a V-shaped recovery yesterday, reclaiming most of its losses. In the eyes of commodity traders, silver prices are still in a bull market, but for photovoltaic manufacturers, it has become a grim harbinger of life and death.
On January 16, Wallstreetcn reported that the Trump administration temporarily postponed imposing tariffs on key minerals, causing silver prices to retreat from their record highs, but ultimately rebounded in a V-shaped move, recouping most losses by day's end. Since the start of last year at $29.41/oz, spot silver has risen by more than 200% to date.
This surge has destroyed the cost models of the photovoltaic industry. According to Bloomberg New Energy Finance, silver paste's share of total module costs has soared from 3.4% in 2023 to 29% now. Silver paste has officially replaced silicon as the largest cost factor in PV modules.
With soaring silver prices, photovoltaic companies are facing severe tests. Some have chosen to stop production or raise prices, while manufacturers are accelerating efforts to reduce their silver usage.
For every RMB 1,000 rise in silver, costs rise by a cent
Calculations show that for every RMB 1,000/kg increase in silver prices, the per watt cost of a solar cell rises by 0.01 yuan (1 cent). For an industry with thin margins like PV, this one cent is enough to determine a factory's operating rate.
BNEF analyst Yali Jiang points out that this surge in raw material prices has created "irresistible cost pressure" on manufacturers.
Currently, TOPCon cells use about 10-13mg/W of silver; if silver paste prices remain high, or rise further to RMB 10,000/kg, silver paste alone will cost 0.1-0.13 yuan/watt.
This pressure is directly reflected in terminal prices. InfoLink Consulting observed that this week, Chinese module manufacturers raised prices by 1.4%-3.8%, with mainstream 500W modules returning to RMB 400 (about $57).
Leading firms like LONGi Green Energy and Aiko Solar have recently raised shipment prices. Aiko openly stated that due to raw material prices, module costs are rising rapidly.
From "production cuts to maintain price" to "shutdowns and holidays"
Compared to head companies’ price hikes, the situation for mid- and small-sized firms is much more dire.
Drying up cash flow, broken financing channels, and inventory buildup—these three mountains are forcing companies to take extreme measures: halting production.
As previously reported by Wallstreetcn, a battery producer in Hunan with a yearly capacity of 2GW fully shut down production on January 12, with its manager bluntly stating "there is currently no alternative plan."
More notably, veteran PV firm Eging PV has shut down both its Changzhou and Chuzhou plants. Financial reports show Eging PV's short-term liabilities exceed RMB 2.5 billion, while its cash reserves are only RMB 786 million, with a cash-to-short-debt ratio below 0.32.
This week, performance warnings from Trina Solar and Jinko Solar also confirm the industry's chill; despite more than a year of capacity clearing and self-discipline measures, they still expect net losses in 2025.
This round of silver price surge is not purely financial speculation, but a result of fundamental supply-demand imbalance.
The explosive growth of PV, AI servers, and new energy vehicles means industrial demand accounts for 65% of total silver demand. According to SMM statistics, the PV industry alone accounts for more than 15% of global silver output, with a supply-demand gap expected to reach 5,000 tons by 2025.
Meanwhile, there is almost no flexibility in supply. Globally, about 70-80% of silver is produced as a by-product of copper, lead, and zinc mining—miners cannot ramp up production just for rising silver prices.
Efforts to reduce silver use
In the face of high silver prices, "de-silvering" has become a necessity for survival.
Last week, LONGi Green Energy announced it would accelerate the use of base metals to replace silver, with Jinko Solar and Shanghai Aiko also following suit.
SMM estimates that using technologies like copper electroplating and silver-coated copper, the PV industry may reduce silver consumption by 17% this year. SMM PV cell analyst Jiang Chenyi revealed that certain technical routes have already brought silver content down to 25%, and theoretically could achieve up to a 90% reduction.
But this aggressive substitution strategy carries huge risks. Silver Bullion Group founder Gregor Gregersen warns:
If the panels fail after ten years but the warranty is for twenty, manufacturers will face huge liabilities that could even lead to bankruptcy.
Copper is chemically less stable than silver and oxidizes easily, while customers usually require 20-year warranties for modules. Currently, mainstream copper replacement lacks sufficiently long-term empirical data. Jiang Chenyi also admitted that current solutions still face challenges like unstable paste printing and inadequate yield rates.
Right now, PV firms are walking a tightrope. On one side is the cash crunch from soaring silver prices, and on the other lurks future risks from aggressive technical substitutions. Either way, a heavy price may be paid.
Risk warning and disclaimerThe market involves risk, investment should be cautious. This article does not constitute personal investment advice and does not consider the special investment objectives, financial situations, or needs of individual users. Users should assess whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this is at one's own risk.
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