The atmosphere of uncertainty in German policy and the delayed decisions have driven first quarter (Q1) 2012 global demand to 6.9 gigawatts, a decrease of 35 percent Q/Q (quarter over quarter), but 146 percent Y/Y (year over year). Nevertheless, the demand in Europe is forecasted to fall 27 percent in 2H12 compared to the first half of the year. Solarbuzz says this is an atypical annual phase.
4Q11 end-market revenues globally were $35.4 billion, the highest since 4Q10. However, this is also projected to fall to $22 billion in 4Q12 due to lower volumes and prices. The first three quarters of 2011 saw a rather weak global demand growth and there was over-optimism on shipments and production as Solarbuzz indicates. This led to the pricing collapse in the photovoltaic chain.
"Major cell and module manufacturers are projecting shipment growth of 23 percent in 2012, considerably less than the 40 percent they had initially planned for 2011 at the same point last year. The acceleration of demand into 1H12 will initially support these growth plans," says Michael Barker, Analyst at NPD Solarbuzz. "However, the quarterly 2012 forecast anticipates the need for production cutbacks in Q412, resulting in only 13 percent shipment Y/Y growth by the end of 2012."
The report published the findings on the Chinese, Taiwanese and Rest of World manufacturers as well, companies that increased their production share from 69 percent in 4Q10 to 78 percent in 4Q11. The findings show that this share will increase moderately to 79 percent by 4Q12. Cutbacks on production as well as increased shipments from some manufacturers led to the upstream module inventory days dropping 24 percent Q/Q to the end of 4Q11. Downstream, otherwise, benefitted from the 4Q11 demand increase and their inventory days fell by 81 percent.
Vertically integrated western and Japanese companies had to deal with negative margins for the third consecutive quarter in 4Q11. Average tier 1 Chinese companies saw gross margins fall from 12 to seven percent.
"Major PV companies no longer have the balance sheet flexibility to absorb large additional cuts in prices," added Barker. "They will need to watch the supply/demand balance closely in order to avoid further pressure on gross margins."
The complete report can be downloaded here.