IHS predicts module prices to stabilise in 2Q in 2013

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PV revenues and module prices will stabilise in the second half of 2013 thanks to a surge in demand in the final quarter of 2012, according to analytics provider IHS.

A new PV module shipment record of 11GW was reached in the fourth quarter according to the IHS Solar Integrated Market Tracker. However, the report also demonstrates that despite this positive sign the situation of the global PV industry remains critical and a substantial recovery of the supply-demand balance is not expected to occur before the second half of 2013.

IHS forecasts 35GW of global installations in 2013, up 10% over 2012. However, this is lower than IHS’s forecast for this year published in October 2012. The report had anticipated that operational module manufacturing capacity would reach 51.9GW in 2013.

Unfortunately, the third quarter of 2012 dealt another blow to the global PV industry, attributed to Germany in IHS’s report in December. Official figures by Germany’s Federal Network Agency put PV installations at 611MW in October, a drop from September’s 980MW.

Global installations did however reach 7.8GW, but markets softened again.

“Installations in the third quarter amounted to just 7.5GW. Wholesalers, EPCs and PV suppliers were forced to carefully control their inventory levels due to falling prices and low shipment levels and production cuts were the consequence,” commented Principal Analyst Stefan de Haan.

The report said that in the third quarter of 2012, average module capacity utilisation fell to 49%, cell capacity utilisation to 56%, wafer capacity utilisation to a record low of 55% and polysilicon capacity utilisation to 63%. In parallel, prices continued their slide in the third quarter of 2012 resulting in module industry revenues of only US$6.0 billion – the lowest value since the second quarter of 2009. These difficult conditions were reflected in an increasing number of suppliers exiting the market.

Fortunately there are positive signals from authorities in several key markets such as China and France raising hopes that recovery of the PV industry could happen faster than predicted.

“In the fourth quarter of 2012 global PV markets rebounded sharply. Very strong demand from Asia, with the surge driven largely by China and Japan, helped to compensate for sluggish demand in Europe.

“IHS estimates that global PV installations were 10.1GW in the fourth quarter of 2012. In particular leading Chinese module suppliers benefited from the uptick in demand and shipped much more than previously expected,” explained de Haan.

According to data from market research firm ENF, ASP declines in 2012, driven by industry overcapacity throughout the PV supply chain, had forced over 350 companies in China, from equipment suppliers, polysilicon producers to module manufacturers, to stop operations entirely in 2012.

The data revealed that the number of companies exiting the sector due primarily to bankruptcy was close to 300, reducing the number of players to 704, according to ENF.

In total, 11GW of global module shipments are estimated for the fourth quarter of 2012 – a new record for the industry. Average market pricing for crystalline modules declined to US$0.65 per watt at the end of 2012, down from US$0.70 at the end of September.

However, the price decline lost momentum in the course of the fourth quarter. Towards the end of the year some module prices even increased. Record-level shipments paired with stabilizing prices drove a profound recovery of revenues. According to the IHS Solar Integrated Market Tracker, fourth quarter 2012 module revenues grew by 42% quarter-over-quarter, reaching US$8.5 billion.

IHS warns that in the first quarter of 2013 suppliers could experience the usual seasonal weakness of global solar markets. Global PV installations are forecast to drop to 6.7GW in this quarter. As a result upstream shipments and revenues will temporarily come under pressure again. With prices forecast to decrease by another 4-5% in the first quarter of 2013 (compared to the fourth quarter of 2012), module revenues will fall back to the critical levels of the third quarter of 2012 – or even below. This will force more suppliers to review their business models and eventually leave the solar market.

“Whilst it’s too early to give the all-clear for the PV supplier industry, there is increasing indication that the year 2013 will mark the turnaround,” concluded de Haan.

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