European module prices rise for first time in 4 years

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Europe is the world’s largest solar market, accounting for 57% of global installations in 2012, but the rise in worldwide demand is arising from booming sales in China and Japan.

The average selling price (ASP) for Chinese crystalline silicon photovoltaic modules shipped to the European Union increased by 4% in March, the first monthly rise since January 2009, according to IHS. Prices are set to rise by another 1% in April and by an average of 4% during the next three months.

Average Chinese module prices by the end of May are expected to rise from 5 to 6% compared to March, reaching US$0.691/Wp or €0.53/Wp.

In addition, pricing is on the increase from Chinese suppliers of all tiers. For example, prices of tier 1 Chinese suppliers grew by 2.3% during March, while the average prices of second- and third-tier Chinese suppliers went up by 2.8% and 1.4%, respectively, during the same period.

This upward trend is due to a number of factors, such as the newly restored balance between supply and demand. As part of its antidumping action, the EU in early March commenced compulsory registration for imported Chinese solar products.

As a result, major European markets such as Germany and the U.K. suffered a shortage of photovoltaic modules. This is expected to intensify ahead of the preliminary EU solar anti-dumping decision to be announced in early June.

"For years, solar module manufacturers have contended with profit-killing market conditions characterized by oversupply and rapidly falling prices," said Glenn Gu, senior analyst at IHS. "Now, with clear signs that the balance between supply and demand is correcting, prices have stopped their decline and have begun to rise."

Meanwhile in China, the government is expected to reduce its feed-in tariff (FIT). IHS believes that the cut will be lower than expected. Adding to this positive expectation is China’s upcoming announcement of an upward adjustment to the incentive scheme for distributed PV. "Both of these news items are expected to support solid module prices in China market," writes IHS in the May edition of pv magazine.

It adds that Chinese module prices in the EU are expected to increase rapidly in May and June in turn driving up overall average module prices globally. "With many Chinese module suppliers cutting back shipments or retiring ahead of the expected EU solar anti-dumping preliminary decision to be announced in early June, an EU market module shortage is expected to continue through then."