CHINA SOLAR OVERPRODUCING

Chinese Tier 2 PV Module Utilization Fell To Record Low in Q4’11
9 January 2012 (IMS Research)

"The average production capacity utilization rate of Chinese Tier 2 crystalline PV module manufacturers fell to just 35% in Q4’11 according to the latest quarterly report from IMS Research and is forecast to fall even lower in Q1’12. As a result of high inventory levels and a weak outlook for demand in 2012, many suppliers closed down production lines, or suspended production entirely, resulting in utilization falling to the lowest level IMS Research has recorded…

"[U]tilization rates of these suppliers hit 80% in Q4’10… Tier 2 suppliers rapidly expanded their capacity… with the expectation of another strong year. With global installations growing by ‘just’ 25% in 2011, compared to 160% in 2010, these rapid capacity expansions led to a severe over capacity. As a result, total PV module production capacity in 2012 will be nearly double the true market demand…"

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"Low utilization has also impacted on PV module prices…Chinese Tier 2 suppliers have aggressively decreased their prices and the average price from Chinese Tier 2 suppliers in Q4’11 was 37% lower than in Q4’10. Despite the rapid decline of Chinese Tier 2 pricing…distributor pricing for these modules was 16% higher than supplier pricing in December, as local distributors capitalized on end-of-year rushes in major European markets.

"IMS Research predicts that utilization of Chinese Tier 2 suppliers will begin to rise again in Q2’12, due to reduced inventory levels, most suppliers halting capacity expansions, and some suppliers exiting the market."