After a disastrous third quarter of 2012 featuring extremely low factory utilization rates across the entire solar supply chain, a surge in demand was seen in the final quarter of the year for solar modules. A new solar module shipment record of 11GW was reached in the fourth quarter according to IHS. Despite this positive sign the situation of the global solar industry remains critical and a substantial recovery of the supply-demand balance is not expected to occur before the second half of 2013.
Solar markets rebound sharply in the fourth quarter of 2012
The third quarter of 2012 dealt another blow to the global solar industry. After a relatively strong second quarter resulting in global installations of 7.8GW, markets softened again. "Installations in the third quarter amounted to just 7.5GW. Wholesalers, EPCs, and solar suppliers were forced to carefully control their inventory levels due to falling prices and low shipment levels and production cuts were the consequence," commented principal analyst Stefan de Haan. In the third quarter of 2012, average module capacity utilization fell to 49%, cell capacity utilization to 56%, wafer capacity utilization to a record-low 55%, and polysilicon capacity utilization to 63%. In parallel, prices continued the slide in the third quarter of 2012 resulting in module industry revenues of only US$6.0 billion - the lowest value since the second quarter of 2009. These difficult conditions were reflected in an increasing number of suppliers exiting the market.
"In the fourth quarter of 2012 global solar markets rebounded sharply. Very strong demand from Asia, with the surge driven largely by China and Japan, helped to compensate for sluggish demand in Europe. IHS estimates that global solar installations were 10.1GW in the fourth quarter of 2012. In particular leading China-basaed module suppliers benefited from the uptick in demand and shipped much more than previously expected," explained de Haan. In total, 11.0GW of global module shipments are estimated for the fourth quarter of 2012 - a new record for the industry. As anticipated by IHS, average market pricing for crystalline modules declined to US$0.65/watt at the end of 2012, down from US$0.70 at the end of September. Importantly, however, the price decline lost momentum in the course of the fourth quarter. Towards the end of the year some module prices even increased. Record-level shipments paired with stabilizing prices drove a profound recovery of revenues. According to HIS, the fourth quarter 2012 module revenues grew by a stunning 42% on-quarter, reaching US$8.5 billion.
Suppliers will experience seasonal weakness in the first quarter of 2013
In the first quarter of 2013 suppliers are predicted to experience the usual seasonal weakness of global solar markets. Global solar installations are forecast to drop to 6.7GW in this quarter. As a result upstream shipments and revenues will temporarily come under pressure again. With prices forecast to decrease by another 4 -5% in the first quarter of 2013 (compared to the fourth quarter of 2012), module revenues will fall back to the critical levels of the third quarter of 2012-or even below. This will force more suppliers to review their business models and eventually leave the solar market.
2013 will be the year of the turnaround
After a tough first quarter, a substantial increase in global demand is forecast to drive increasing revenues and stabilizing prices in the second half of 2013. IHS forecasts 35GW of global installations in 2013, up 10% over 2012. Although this level of growth is lower than previous years, it will drive a continuous improvement of shipments and revenues in the polysilicon to module supply chain throughout 2013. Recent positive signals from authorities in several key markets like China and France raise hopes for the recovery of the solar industry to happen even faster. "Whilst it is too early to give the all-clear for the solar supplier industry, there is increasing indication that the year 2013 will mark the turnaround," concluded de Haan.
