L R AS Published on Sunday 5 July 2020 - n° 327 - Categories:the prices
Panel prices plummet because of the pandemic
After the halt in foreign markets due to the coronavirus, some European countries and emerging markets are now showing signs of a slow recovery. The Chinese market was occupied by the rush to commission the installations before 30 June, the government
having left the tariff deadlines unchanged until mid-May. Demand is expected to remain weak at the beginning of the third quarter.
The Top Runner programme and ultra-high efficiency projects are continuing. As a result, Chinese demand should reach 10.7 GW in the second quarter (after 4 GW installed in the first quarter). The installation boom of 30 June is contributing 6 to 8 GW, which means that the recovery in demand will be short-lived. PV InfoLink maintains its installation forecast at 39.5 GW for the full year.
In order to ensure the smooth running of the projects, countries around the world have either extended the grid connection deadlines or postponed the auction schedules. As countries are lifting the containment measures cautiously and in stages, the installation of the projects is progressing slowly. PV InfoLink has revised the expected share of foreign markets in global demand this year from 69% to 64%. Global demand will remain weak in the second and third quarters. Proportionally, China's share of global installations is increasing!
Although they felt the disruption of the pandemic in the first quarter of 2020, Tier 1 panel manufacturers have managed to maintain between 60% and 80% capacity utilization. Panel deliveries were halted in April due to the postponement of demand in foreign markets. India imposed a national lockout; the Middle East applied curfews; Europe remained closed. Deliveries could not be made as planned. As a result, panel manufacturers stopped subcontracting and reduced their utilisation rates. Tier 1 manufacturers were initially expected to reduce their capacity utilisation by 10-20% in April and May. In reality, they benefited from the rush of installations in China in the second quarter. The top ten panel manufacturers recorded higher than expected utilization rates.
Even if foreign demand continued to stagnate, the Tier 1 panel manufacturers will maintain a utilization rate of around 80%, while the Tier 2 players will operate at 30-50% due to lower order volumes. This is a consequence of brand, channel and cost disadvantages relative to Tier 1 manufacturers. The top 10 panel giants have maintained their delivery targets this year, after taking the majority of orders in China.
Panel manufacturers are adapting their production facilities to the rapidly changing size of wafers: more than 56 GW of new capacity is planned this year. The oldest equipment will be eliminated to limit the increase in capacity. This makes it difficult for Tier 2 manufacturers to survive when demand remains consistently low.
The results of the project auctions in China announced in mid-May suggest that a price war has already started between Tier 1 manufacturers to win orders. As a result, bid prices are falling to historically low levels. This trend will continue in the second half of the year.
Panel prices are expected to decline from $0.2-0.203/W in the second quarter to $0.195-0.198/W in the third and fourth quarters (- 2.5%). This downward trend will only stop with the return of high season in the fourth quarter.
https://www.pv-magazine.com/2020/06/30/module-prices-plunge-as-covid-19-hammers-demand/
PV Magazine of 30 June
