Contrary to PV manufacturers' high utilization rates spurred by UK and Japan market demands in the first quarter of 2014, pricing in the PV industry is likely to drop in the following quarter, according to EnergyTrend.
The market research firm attributes the ongoing countervailing duty (CVD) and anti-dumping duty (AD) issues between the United States, China and Taiwan as the main cause behind the decline, and noted PV shipments were mostly focused on the US market, while shipments have eased in other markets.
Solar PV supply chains are starting to see demand in China whither, while demand in the United States and Japan remain stable, according to EnergyTrend Research Manager Jason Huang. As such trends occur, solar supply chains are nevertheless expected to increase production capacity in the second half of 2014, which means Chinese market demands will play a major role in terms of global solar PV pricing and volume.
If demands in China remain at around 10-12GW, then manufacturers in the PV supply chain can balance out orders in conjunction with their new capacity. However, if Chinese market demands are lower than expected coupled with uncertainties surrounding CVD and AD issues, the PV market still risks oversupply and hence declined prices.
Meanwhile, recent EnergyTrend statistics show first-tier polysilicon makers are currently running at full capacity and polysilicon pricing is on the rise. Evaluations of manufacturers expansion plans after 2015 show manufacturers that previously halted productions returning to the market. In the short term, these manufacturers will be focused on manufacturing quality so utilization rates will remain low and have limited effect on market demands.
Silicon wafer makers on the other hand saw strong demands in the first quarter of 2014, and thus this led to steady PV shipments and pricing. Meanwhile, second-tier manufacturers were able to maintain high utilization rates. However, as demands weaken in 2Q14, second-tier vendors are likely to return to more conservative outlooks, and production strategies after clearing out inventory.
Because of the postponement on the US-China preliminary AD rulings, solar cell makers in Taiwan could maintain high utilization rates until mid-June this year. On the other hand, Chinese manufacturers saw utilization rates drop due to the financing pressures caused by excess inventory in the United States. If solar demand picks up in the second half of the year, however, manufacturers might add more than 4GW solar cell production capacity onto the market, said Huang.
In terms of modules, top Chinese manufacturers still control export markets, and are using it as a measure to alleviate shipment risks. Whereas second- and third-tier makers have seen reduced OEM orders. Moreover, the Chinese market demand has remained dormant, with manufacturers utilization rates showing polarized results. Trade wars with the United States are also impacting Chinese manufacturers business strategy as more are engaged in global OEM strategies.
Other manufacturers outside of China and Taiwan have also scaled up production capacity in Southeast Asia, Korea, Japan and other regions to fill in the demand gap left by Chinese manufacturers because of trade wars against China carried out by Europe, the United States, India and Australia.