Greentech Lead America: China contributes major share in global photovoltaic panel shipments thanks to the strong domestic solar policies and the declining PV incentives in Europe, according to the latest report from NPD Solarbuzz.
The Chinese end-market dominated shipments of solar photovoltaic (PV) panels during the final quarter of 2012 with 33 percent of global end-market demand, according to new research released in the NPD Solarbuzz Quarterly report.
“Just two years ago, the Chinese end-market was less than 10 percent of global PV demand,” said Michael Barker, senior analyst at NPD Solarbuzz. “However, during Q4’12, a third of all global PV panel shipments ended up in China. This is the start of a new chapter for the solar industry, with China potentially taking center stage in both the upstream and downstream channels.”
While global solar PV demand increased to 8.3 GW during Q4’12, the shift during 2012 in year-end demand from Europe to China has presented a new set of challenges for the PV industry.
According to Barker, “The Chinese end-market has different module supplier preferences, pricing expectations, and routes to market. However, threatened by the impact of global trade barriers, the biggest challenge will fall on Chinese manufacturers that are restricted to domestic demand only.”
Chinese demand continues to be heavily back-end weighted. In 2012, Q4’12 demand in China accounted for almost 60 percent of annual demand. However, this demand phasing provides a significant dilemma for suppliers as they struggle to balance the rewards of year-end shipments with the risks from rising inventories and potential write-downs earlier in the year, the report said.
In fact, it was only during Q4’12 that PV manufacturers’ inventories declined. This occurred precisely because of year-end demand from China, allowing module shipments to exceed factory production levels. As a result, module inventory levels at PV manufacturers declined by 4 percent Q/Q in Q4’12, to a year-end low of 65 days.
“Manufacturers that succeed in broadening their end-market coverage should achieve a healthy balance between quarterly production and shipment levels in 2013,” added Barker. “In addition, hedging against the effects of the various trade wars, which are expected to be settled sometime this year, will also be essential for success moving forward.”
The report concludes that solar PV manufacturers need localized strategies to deal with contrasting supply and demand from China.