In its new Quarterly report, Solarbuzz has estimated that by the end of the second quarter 2011, global solar module inventories will reach a record setting 8.6GW. Citing an anemic market demand from Europe during the first half of 2001, Solarbuzz has estimated that Q2 2011 shipments dropped 22% quarter over quarter, compared to the 12% quarter over quarter increase that manufacturers had predicted.
Solarbuzz noted that even with demand growing 79% quarter over quarter and production dipping 20% quarter over quarter, the quarterly cell and module inventories rose to 559MW. As upstream inventories display a 36% increase over the quarter, compared to a small reduction downstream, the recipe has been set for an inventories to arrive at 8.6GW by the end of Q2 2011. Europe has already seen impacts from the excess inventories with factory-gate module prices falling by 9% during Q2 2011 and 16% since the beginning of the year.
“Recent price reductions from Tier 2 Asian manufacturers will place enormous pressure on others to follow suit,” said Craig Stevens, president of Solarbuzz. “Even with significant cutbacks in production and shipments, Q4’11 factory-gate module prices are still projected to fall 25% year over year.”
Solarbuzz’s report maintains that the PV industry seems to be prepared for the second half of 2011, which is anticipated to be quite challenging. While PV manufacturers’ uphold a confident attitude that production and shipments will increase to reach supply levels that are 1.4 to 1.7 times bigger than 2010, the project low 5% growth that the end-market will achieve opposes manufacturers hopes. Additionally, the originally revised global PV market size of 19.3GW for 2010 is now only expected to reach 20.3GW in 2011.
“Maintaining an accurate and timely picture of both company shipments and the global supply/demand balance in the industry will be key to ensuring inventories are managed effectively over the second half of the year,” added Stevens.
The report noted that even as producers foresee lower prices leading to demand increases during the second half of the year, Solarbuzz observed that it would depend on downstream inventories declining at a fast rate while additionally solving the policy issues that Europe experienced during the first half of the year. The report discerned that as is stands, many downstream companies are determined on diminishing their inventories over additional purchasing so that they can potentially elude write-offs stemming from price downfalls.