Solarbuzz: Don't expect demand rebound from inventory, pricing flux
By James Montgomery
News Editor
July 5, 2011 - Weak demand in Europe has led to rising inventory levels and
prices going down. But one analyst argues that demand won't necessarily pick
up again later in the year.
2Q11 solar PV module shipments sunk 22% (vs. 12% expected by manufacturers,
notes Solarbuzz), and despite surging demand and production cutbacks, cell
and module inventories still rose by about 559MW to reach an estimated
record 8.6GW. As a result, factory-gate module prices sunk 9% in Europe, and
are down 16% through 1H11.
Solarbuzz president Craig Stevens sees Tier 2 Asian manufacturers putting
"enormous [pricing] pressure" on competitors; despite significant cutbacks
in production and shipments, he sees prices in 4Q11 a full -25% lower than
the same period a year ago. He's only predicting 5% growth in the global PV
market in 2011, to just 20.3MW from 19.3MW, even as PV manufacturers' supply
levels swell by 1.4×-1.7×.
This assessment is a tad bearish compared with IMS Research's recent report,
which predicts that crashing PV module prices will turn into a boon in 2H11
for module shipments that have suffered on weak demand in key markets. IMS
Research's Sam Wilkinson forecasts 30% growth in PV module shipments for
both 3Q11 and 4Q11, channel inventories down to about a quarter's worth of
production, and full-year PV module shipments exceeding 23GW.
Not so fast, says Stevens. Lower prices generating 2H11 demand will "depend
on downstream inventories falling fast and on resolving the policy
uncertainties in Europe that have characterized 1H11," he notes. And right
now those downstream companies, instead of ramping up procurement, are still
trying to reduce their own inventories (successfully, with a small reduction
vs. the 36% spike in upstream inventories) to avoid write-offs that would
result from a pricing collapse.
Global PV demand and cell/module inventories. (Source: Solarbuzz)
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