Strong early-year photovoltaic market demand in 2012 – stimulated by a shifting and uncertain policy environment in Europe – has established the foundation for PV manufacturers to increase shipments this year, according to the latest Solarbuzz Quarterly report from NPD Solarbuzz.
Global industry end-market revenues for the fourth quarter of 2011 (Q4'11) reached $35.4 billion – their highest level since Q4'10 – but they are now projected to drop to $22.0 billion in Q4'12, a result driven by both lower volumes and prices.
Over-optimism on shipments and production 12 months ago – together with weak global demand growth in the first three quarters of 2011 – were the drivers of last year's pricing collapse through the PV chain, NPD Solarbuzz says.
‘Major cell and module manufacturers are projecting shipment growth of 23 percent in 2012, considerably less than the 40 percent they had initially planned for 2011 at the same point last year,’ says Michael Barker, an analyst at Solarbuzz. ‘The acceleration of demand into [the first half of 2012] will initially support these growth plans.’
‘However, the quarterly 2012 forecast anticipates the need for production cutbacks in Q4'12, resulting in only 13 percent shipment [year-over-year] growth by the end of 2012.’
The report also finds that Chinese, Taiwanese and rest-of-world manufacturers, which grew production share from 69% in Q4'10 to 78% in Q4'11, are projected to increase their share moderately to 79% by Q4'12.
Upstream module inventory days dropped 24% quarter-over-quarter at the end of Q4'11, through a combination of production cutbacks and increases in shipments from some manufacturers in the final quarter. However, downstream companies were the primary beneficiaries of the Q4'11 demand boom, as their inventory days dropped by 81%.
Vertically integrated Western and Japanese manufacturers dealt with negative margins for the third consecutive quarter in Q4'11, while average Chinese tier-one gross margins declined from 12% to 7%.
‘Major PV companies no longer have the balance sheet flexibility to absorb large additional cuts in prices,’ Barker notes. ‘They will need to watch the supply/demand balance closely in order to avoid further pressure on gross margins.’