Indian solar EPC players have been hit hard with around 20% increase in raw material prices of steel, copper and aluminum coupled with a rise in module prices and ocean frieghts.
Engineering and Construction costs increased for the fourth consecutive month in February, according to IHS Markit and the Procurement Executives Group (PEG). February’s headline IHS Markit PEG Engineering and Construction Cost Index came in at 68.2.
Indian solar EPC players have been hit hard with around 20% increase in raw material prices of steel, copper and aluminum coupled with a rise in module prices and global ocean frieghts.
As per Infolink, since January, polysilicon shortage, coupling with buyers’ hoarding of polysilicon and sellers’ unwillingness to sell, have prompted manufacturers to raise prices for mono-grade polysilicon amid panic buying. This has led to at least 20-25% rise in prices of solar modules. The average module prices in India were 0.216 USD/W.
Survey participants witnessed price escalations for all categories under the materials and equipment sub-index for the second month in a row; January marked the first time all categories had reported increases since July 2018. Copper prices continued to increase, recording the eighth consecutive month of increases. The carbon steel pipe price index rose to a figure of 78.6 in February, up from 70 in January.
Fabricated structural steel prices rose as well, from a score of 70 to 71.4. Transformer prices recorded their third straight price increase, returning to a level above 60 at 66.7.
Ocean freight from both Europe and Asia to the United States also continued to see increases, notching the sixth straight month of price increases.
“Containerized spot rates along Asia to the United States routes remain elevated compared to last year and are not likely to return to pre-pandemic levels in 2021,” said Tal Dickstein, senior economist at IHS Markit. “Pandemic consumption behaviors and a decrease in the production of containers last year resulted in a sharp drop in the availability of boxes even for carriers that had been stocking up prior to the pandemic. Asymmetric pandemic conditions caused container shortages and port congestions, further delaying ships and container movement, adding a premium on space when available.”
The sub-index for current subcontractor labor costs came in at 52.7 in February, slightly higher than January’s index figure of 51.1. According to survey responses, labor costs only rose in the Southern region of the United States. Labor costs remained flat throughout most of the remaining United States and throughout all regions of Canada.
The six-month headline expectations for future construction costs index registered 76.6 in February, displaying respondents’ expectations of continued price increases through the first half of 2021. Both sub-indexes reflected this sentiment, with the materials and equipment sub-index totaling 78.0 this month. The six-month expectations index for sub-contractor labor recorded a reading of 73.4 in February, with labor costs still expected to increase in all regions of the United States and Canada.
Most survey responders did not report any shortages for materials and equipment but noted shipping constraints.