A report by the German Engineering Federation (VDMA) published today has revealed a significant slowdown in solar manufacturing equipment demand from China in the third quarter (Q3), while also noting a sizeable uptick in the number of orders being placed from other East Asia countries.
The most noteworthy figure, however, was the fact that in the first three quarters of 2016, new order volumes surpassed those lodged in the entire year of 2015, with order significantly exceeding the number of delivered equipment with a book-to-bill ratio of 1.5.
Year over year, Q3 saw a 14% decline in sales compared to Q3 2015, and a 35% decline sequentially (when compared to Q2 2016). This indicates that the first half of the year was incredibly strong for Germany’s solar equipment producers, buoyed by record levels of demand in China as module manufacturers raced to beat the FIT reduction of June 30.
Since that mid-year high point, the market has altered dramatically, the VDMA data shows. Not only have volumes tumbled, but so have geographies shifted. While Asia still accounts for the bulk of demand – accounting for 89% of all exports – China’s grip loosened as Chinese-headquartered solar companies placed orders from and for their East Asian plants in an effort to continue to circumvent trade duties in order to profitably supply the solar markets of Europe and the U.S.
"The high investment activity of the solar cell manufacturers in the expansion of existing and new production capacities has slowed down, especially in China,"said Peter Fath, VDMA chairman and MD of RCT Solutions. "New orders are now coming increasingly from the Asian region outside of China."
East Asia accounted for 74% of turnover among German solar equipment manufacturers in Q3, with the U.S. accounting for 13% and Germany 11%. The rest of Europe comprised a mere 2%, the VDMA confirmed.
Fresh impetus in deliveries are expected in 2017, particularly in the markets of India, the Middle East and North Africa, where plans to develop long-term manufacturing industries in those regions are gathering pace.
In terms of technology, machinery for producing solar cells accounted for 55% of turnover, followed by crystalline module production tools (20%), thin-film machinery (15%), and polysilicon, ingot and wafer production equipment (10%).
"The order situation was good in the third quarter of 2016," said VDMA director, PV equipment, Jutta Trube. "We see a further shift in the new markets for the coming months. Enhancing technologies for crystalline applications establishes itself further. Crystalline solar cell manufacturers choose increasingly Heterojunction technology, which promises the highest efficiencies. Many existing facilities can be equipped with these more efficient technologies."