China’s domestic market is not the only photovoltaic area expected to boom in 2013. Based on monthly analysis from the Solarzoom Data Research Centre, January saw global photovoltaic module deliveries increase by 42% over December.
According to the figures, areas of growth include: South Africa (197%), India (141%), the U.K. (133%), and the Ukraine (1,200%). In comparison, the rest of Europe grew by around 14% in the described period. Meanwhile, the U.S. saw 38% more modules imported from China, despite the recently imposed tariffs.
Overall, U.S.-listed Chinese companies delivered approximately 32% more volume globally than amounts shipped in December. Topping their own deliveries versus December results were JinkoSolar Holding Co., Ltd (NYSE:JKS), with over 300% more delivered overseas, followed by Canadian Solar Inc. (NASDAQ:CSIQ) with 53%, and Trina Solar Limited (ADR)(NYSE:TSL) with 35%.
Individual companies dominated country landscapes, repeating patterns of the prior quarter. Companies included: ReneSola Ltd (ADR)(NYSE:SOL) in Greece, CTIEC Solar in the Ukraine, Suntech Power Holdings Co., Ltd (ADR)(NYSE:STP) in South Africa, and Trina in Australia.
Yingli Green Energy Hold. Co. Ltd (ADR)(NYSE:YGE) carried on as the delivery leader in the U.K. It also took first place in the U.S. In Japan, the most photovoltaic module deliveries came from JA Solar Holdings Co., Ltd (ADR)(NASDAQ:JASO), which shipped more than Kyocera from locations in Tianjing. Meanwhile, Yingli, delivered the most volume to Europe during January.
Yingli was also the largest shipper by volume overall, with double the amount of the second-place taker Canadian Solar and third-place Trina. Both Trina and Yingli published results for Q4, with revenue-generated shipments of 414.5 MW and 692 MW, respectively. A large contributing factor for those shipment figures, based on revenue calculation, was the domestic market. Yingli recorded approximately 44% revenue in China, and Trina 32%.
Taking delivery quantities in January as a pattern for February, and assuming they are not for the purpose of increasing inventory levels at ports, but are recognized revenue shipments, both companies are in a position to meet their guidance for Q1 of 600 MW for Yingli, and 420 MW to 440 MW for Trina.
One possible risk to overall Q1 expectations at this juncture is the EU registration of Chinese modules which, in addition to logistical issues, will reduce the amount of deliveries, particularly for lower-tier companies. The Q1 volume is not expected to have as large a contribution from China as it did in Q4. China is expected to further pick up the pace in Q2, based on the clarity of its FIT policies.
While profitability remains distant for tier-1 Chinese companies, price stability, combined with 35 GW of demand and reduced capacity in China, is expected to have a positive impact on the reduction of inventory adjustments in terms of size and frequency, followed by their complete elimination from future income statements.
Operating expenses are also anticipated to be free of "one-time" financial impacts. Furthermore, higher efficiency from existing production lines and improved levels of capacity utilization, combined with lower non-poly processing, should provide enough margin expansion for companies like Trina to see profitability in the second half of 2013, as long as ASP pricing continues to stabilize and eventually rises.
This optimistic projection is not free of possible risks. First, the high tariff condition will certainly see a decline of solar modules exported to the European continent. Second, the rising price of raw materials, including polysilicon – which is expected to increase to $25 per kg – will place pressure on margins, if average selling prices do not rise with it.
While high tariffs would have a cancelling effect on polysilicon pricing and a potential return of inventory glut, a low tariff scenario may benefit tier-1 companies and keep polysilicon pricing at the level of semi-profitability for top poly manufacturers only. This would keep excess capacity dormant, for poly and modules.
A similar effect is seen in the U.S., where execution of the U.S. tariffs has "reserved" this market almost exclusively for U.S.-listed Chinese companies, due to a combination of their individual tariff rates and their buying power of non-Mainland China cell volumes, ousting smaller operators.
Polysilicon pricing will, of course, have different impacts on different companies. Trina has enjoyed poly spot pricing benefits, delivering US$0.10 per watt cost of the material. Meanwhile, Yingli’s costs are much higher, currently at $0.15 per watt, though these costs are not expected to have further adverse effects on the company since contractual poly pricing is at $26 per kg based on quoted cost per watt.
Even if the price were to increase to $25 per kg on the spot market, Yingli can still see further poly price reductions.
In another aspect, frequently described by analysts as having an adverse effect on tier-1 companies, the impending cost surge due to Chinese tariffs on imported silicon appears to have no impact at all. According to statements from Trina and Yingli, only poly imported for use in the domestic market will be faced with the tariff. Material used in modules destined for export will not be affected, therefore assisting Chinese enterprises further in their global presence.
January 2013 Chinese Export Data describing details of deliveries in MW can be purchased at SolarPVInvestor. A Q4 2012 PDF presentation titled "Q4 2012 Investor Starter" describing deliveries in Q4 2012, including 2.9GW of data, is also available at SolarPVInvestor.
Disclaimer: The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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