Marking the end of more than two years of sharp declines, pricing for solar photovoltaic (PV) modules achieved stability in the first quarter of 2013, paving the way for a rise in industry gross margins and return to profitability for some leading suppliers during the year, according to IMS Research.
After falling throughout 2012, global gross margins for PV modules rose to 1% in the first quarter, up from zero in the fourth quarter of 2012. Buoyed by rising prices, the industry-wide gross margin is expected to climb throughout 2013 and reach 6% by year-end, the firm said.
"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. While the market rebound won't be high enough to push the entire industry into profitability in 2013, some top players have already achieved double-digit margins, and should be back in the black by the end of 2013."
The number one and number five 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 ASP for solar modules expected to decline only moderately in 2013 to US$0.71 per watt in fourth-quarter 2013, down from US$0.74 per watt in the first quarter, and polysilicon prices hovering around US$20 per kilogram, these companies could expand their margins to 15% and finally return to profitability, IMS Research believes.
China downshifts as Japan goes into high gear
Despite the signs of a market recovery, leading China-based vendors reduced their output slightly in the first quarter compared to the fourth quarter of 2012. Yingli and Canadian Solar, along with number two Trina, and seventh-place JA Solar all reduced production amid growing concerns about the EU anti-dumping case and a general seasonal softening of global demand in the first quarter.
In contrast, Japan-based vendors, including number three Sharp and number six Kyocera, increased their production significantly in the first quarter. IHS Solar estimates Sharp's output rose by 80MW while that of Kyocera expanded by 100MW when compared to the fourth quarter, IMS Research added.
