SOLAR SUPPLY-DEMAND BALANCING OUT

Supply/Demand Balance Restored to PV Industry in Second Half of 2012; Strong Year-End Demand Motivates Aggressive Cost Reductions Across the Value-Chain as PV Prices Continue to Fall

June 25, 2012 (SolarBuzz)

“The leading metrics influencing PV industry supply and demand (module production, supply and market-demand) are forecast to come to within 8% of the second-half market demand of 17.2 GW, according to [the most recent Solarbuzz Quarterly]…This follows two years of turbulent over-capacity, over-supply, and inventory build…[While supply/demand equilibrium is set to provide a more stable industry environment, manufacturers’ focus will remain on cost-reduction moving into 2013]…”

“Global PV demand for 2012 is forecast to exceed 30 GW (up 8% Y/Y), driven by strong Q4’12 pull from emerging Asia Pacific regions, in particular China. With a 2H’12 demand of over 5 GW, the growth of the domestic Chinese market will provide welcome relief for Chinese c-Si manufacturers, more than offsetting any impacts from the recent US Department of Commerce (DoC) ruling or potential ‘anti-dumping’ filings within Europe.”

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“In fact, most leading Chinese module manufacturers are planning for greater demand this year, by as much as 30% above the 30 GW mark. This optimism comes from year-end surges…emerging countries added to the PV demand-mix…and possible upside from new ground-mount projects whose return-on-investments are decoupled from (legacy) regional incentives…[M]odule shipments will be driven initially by downstream integrators, restocking inventories during Q3’12 in expectation of the year-end demand surge. However, capacity expansion plans remain largely on hold for 2H’12, with the exception of leading Taiwan cell makers that are currently running at maximum utilization levels following the preliminary DoC ruling…

“…[T]otal silicon and non-silicon processing costs are forecast to decline by 20-35% during 2012, but with the non-silicon portion set to fall by up to 50%...During Q1’12, module processing costs surprisingly became the largest part of total silicon and non-silicon costs. However as the least technically-challenging segment of the manufacturing chain, it is not surprising that module processing costs are now set to decline by…over 40% during 2012, with upside for further cost reductions in 2013…”

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