Analyst Interview with Henning Wicht


8b3ef4e2b3_f2cabd0752Both companies and politicians are currently concerned with the question as to how duties will affect the market. Henning Wicht, director and analyst at IHS Global GmbH anticipates a scenario wherein prices for Chinese Tier 1 and Tier 2 modules will increase from €0.45 to €0.65 cents/W, with a decline of a gigawatt when it comes to installations in Germany.

There large plants without private consumption are no longer worthwhile. For France, the U.K. and Italy he expects to a decrease of between 500 MW and one GW. Wicht assumes that in the case of such a scenario, Chinese Tier 1 manufacturers will quickly convert and establish local module factories, for example, in Poland. They would probably produce more cheaply than many German manufacturers, so that the price war would not cease.

Interview with Henning Wicht, Director and Analyst at IHS Global GmbH:

pv magazine: Mr. Wicht, your module price index indicates that prices in the U.S. did not increase as a result of the penalty duties. How can that be explained?

Wicht: Indeed in the last six months we have not observed a price increase for Chinese modules that are sold to the U.S. As far as we can determine today, Chinese manufacturers are circumventing the duties by using cells, for example, from Taiwan and Korea.

pv magazine: Where are the prices currently for Chinese modules and their European competitor products?

Wicht: Chinese modules from large quality manufacturers (Tier 1 and 2) currently cost approximately €0.45/W ex-factory. In contrast, €0.55/watt to €0.60/W is charged for comparable European modules ex-factory. And the prices are even higher for smaller manufacturers.

pv magazine: There are also other Asian manufacturers which have lower costs. How expensive are modules from India and South East Asian countries?

Wicht: You cannot really compare them, because the factories, for instance, in India are much smaller, and accordingly the cost structure is completely different. We estimate that modules from India are 20% more expensive than Chinese goods.

pv magazine: But an alternative for importers of China modules?

Wicht: Certainly, because the market in India is also weakening, the factories are working below capacity and offer modules very cheaply at the level of the Chinese.

pv magazine: And what about cells from Taiwan? Are they substantially more expensive than the ones from China?

Wicht: Taiwanese cell manufacturers have large plants that are able to keep up with Chinese costs. As a result of the antidumping duties on Chinese goods in the U.S., Taiwanese plants are working at full capacity and are also able to demand higher prices.

pv magazine: Among the causes of the decline in prices are the overcapacities, particularly in China. However, the country hardly seems to be willing to reduce these capacities by, for example, letting a supplier become insolvent. Can’t antidumping proceedings accelerate this process?

Wicht: The rules of insolvency also apply to the solar market and its participants. While companies are closing their gates worldwide due to insolvency and/or insufficient liquidity, this practically cannot be observed in China. There are many reasons for this. On the one hand, many solar companies are part of a large group of companies. If the solar segment stops manufacturing, then this fact is not publicized. On the other hand, the federal state governments support large solar companies with 10 and 20,000 employees with loans and guaranties. As a result, the government prevents the market from consolidating. In my opinion, Chinese industrial policy cannot be changed through EU antidumping duties for solar products. However, several of the smaller solar manufacturers could actually disappear.

pv magazine: European manufacturers are struggling with substantial losses and increasing debt. If things continues in this manner, then their existence is threatened. Would penalty duties really help these companies in economic terms or simply exacerbate the problems?

Wicht: The penalty duties will not change anything as far as the structural problem of small and medium-sized module manufacturers are concerned. They have to be clear about the fact that a solar module is increasingly becoming a replacement standard product. Only a few of European manufacturers have factories that can keep pace on a global scale in terms of both their size and costs. Where there are antidumping duties or not – European module manufacturers should adjust to a “commodity” business with small margins and high production outputs.

Interview by Oliver Ristau