The new Solarbuzz quarterly report pinpoints that weak European photovoltaic (PV) market demand in the first half of 2011 caused global solar module inventories to soar at the end of the second quarter of 2011.
Initial estimates from market analyst, Solarbuzz, show that shipments in the second quarter of 2011 fell by 22 percent quarter-over-quarter compared to the increase of 12 percent quarter-over-quarter projected by manufacturers during the quarter. Even with demand rising 79 percent quarter-over-quarter and production falling an estimated 20 percent, quarterly cell and module inventories still increased by 559 MW. Inventories are now forecast to reach a record 8.6 GW by the end of the second quarter of 2011, with upstream inventories showing a sharp 36 percent increase over the quarter, in contrast to a small reduction in the downstream. The excess supply caused factory-gate module prices to drop by 9 percent in Europe in the second quarter of 2011 and 16 percent 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 percent year over year.”
The PV industry is braced for a challenging second half. PV manufacturers’ bullish stance that sustained production and shipments will grow to reach supply levels that are 1.4-1.7 times larger than 2010 contrasts with the forecast that the end-market will grow only 5 percent. The revised global PV market size of 19.3 GW for 2010 is now projected to increase to just 20.3 GW in 2011.
The new Solarbuzz Quarterly report contrasts supply, demand and inventory outcomes according to the producers’ expectations with Solarbuzz’s forecast for “most likely” outcomes in 2011, which projects 65 percent of full-year demand in the second half of 2011.
Many producers now anticipate that lower prices will generate the second half demand increment. However, chances for that depend on downstream inventories falling fast and on resolving the policy uncertainties in Europe that have characterized the first half of 2011. Rather than further procurement, most downstream companies are currently focused on reducing inventories in order to avoid write-offs emanating from the collapse in prices.
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