Sunny days ahead for module suppliers

In its latest IHS Solar Integrated PV Market Tracker, market research group IHS said the first quarter of 2013 marked the end of more than two years of sharp declines as pricing for solar photovoltaic modules achieved stability, paving the way for an increase in industry gross margins and return to profitability for some leading suppliers this year.

After plunging throughout 2012, global gross margins for PV modules rose to 1% in the first quarter, up from zero in the fourth quarter of 2012, according to the report.

IHS predicts the industry-wide gross margin, buoyed by rising prices, will climb to 6% by year’s end.

"The long-suffering solar module market has clearly turned around, with the industry finally on a growth path, not only in terms of output but also for revenue and earnings," said Stefan de Haan, principal PV analyst with IHS.

"Despite a slight decline in industry-wide production, shipments, revenues and factory utilization in the first quarter, the major market upswing in the fourth quarter of 2012 marked the end of the long downturn," de Haan added. "While the market rebound won’t be high enough to push the entire industry into profitability this year, some top players have already achieved double-digit margins and should be back in the black by the end of 2013."

The No. 1 and No. 5 ranked module suppliers in the first quarter — Yingli and Canadian Solar — have issued guidance for gross margins of around 10% for the second quarter. With the global blended average selling price (ASP) for solar modules expected to decline only moderately in 2013 to $0.71 per watt in the fourth quarter, down from $0.74 per watt in the first quarter, and polysilicon prices hovering around $20 per kilogram, these companies could expand their margins to 15% and return to profitability, according to IHS.

China downshifts as Japan goes into high gear

The IHS report noted that despite the signs of a market recovery, leading Chinese manufacturers reduced their output slightly in the first quarter compared to the fourth quarter of 2012. Yingli and Canadian Solar, along with No. 2 Trina and seventh-place JA Solar, decreased production amid growing concerns about the EU anti-dumping case and "a general seasonal softening of global demand in the first quarter."

In contrast, the Japanese manufacturers, including No. 3 Sharp and No. 6 Kyocera, increased their production significantly in the first quarter. IHS Solar estimates Sharp’s output rose by 80 MW while that of Kyocera expanded by 100 MW compared to the fourth quarter.