Despite the threat of expanded duties in the U.S. solar photovoltaic (PV) market, Chinese and Taiwanese polysilicon and solar photovoltaic (PV) module makers are planning significant capacity expansions, according to TrendForce's (Taipei) EnergyTrend division.

However, the company says that Chinese and Taiwanese PV cell makers are holding off on capacity expansions until the final decisions are made in the U.S. trade case. In the interim, Taiwanese cell manufacturers are focusing on increasing efficiencies.

EnergyTrend notes rising prices for polysilicon and wafers in the first half of 2014, as well as increased PV module demand due to growth in the Chinese, Japanese, U.S. and UK markets. The company expects this to drive up prices throughout the PV supply chain.

Trade war halts spot market price increases

EnergyTrend says that polysilicon and wafer prices grew every month in the first quarter of 2014, with polysilicon and multicrystalline silicon wafer prices rising more than 7% in January 2014.

The company says that spot price increases have stopped due to uncertainties around the U.S.-China trade war, however it notes that year-over-year demand has continued to increase, which is driving capacity expansions.

Polysilicon expansions may lead to oversupply

The company reports that GCL New Energy (Hong Kong), TBEA (Changji, China) and Daqo New Energy (Chongqing, China) are all planning on expanding their polysilicon capacities in Western China, where electricity is cheap.

It also finds that Japanese and Korean polysilicon makers are either preparing to expand or are debottlenecking and re-activating shuttered lines. However EnergyTrend warns that oversupply may become an issue again, and notes that spot prices are still lower than the production costs of many polysilicon makers.

Exports to Japan drive Taiwanese PV module capacity expansions

Additionally, both Chinese and Taiwanese PV makers are expanding their PV module capacities. For Taiwanese PV makers, this is motivated by exports to Japan, which made up 43% of Taiwan's PV module export volume of 470 MW in 2013.

Likewise, EnergyTrend estimates that Japan represented 30% of China's export volume in 2013, which rose to 40% in the first quarter of 2014.

EnergyTrend says that the 20 GW of PV projects which have qualified for the Japan's feed-in tariff but have not been built provide a stable outlook for demand in coming quarters.