The leading metrics influencing solar industry supply and demand(,supply and mamodule productionrket-demand)are forecast to come to within 8%of the second-half market demand of 17.2GW,according to Solarbuzz.This follows two years of turbulent over-capacity,over-supply,and inventory build in both the upstream and downstream segments of the value-chain.
According to Michael Barker,analyst at NPD Solarbuzz,"The solar industry has been suffering from a significant imbalance between supply and demand for over 18 months,causing severe price erosion and reducing corporate margins.However,confidence in strong market demand during second-half 2012,together with prudent capacity utilization,will provide solar market leaders with increased visibility ahead of 2013 strategic planning."
Global solar demand for 2012 is forecast to exceed 30GW(up 8%on year),driven by strong fourth-quarter 2012 pull from emerging Asia Pacific regions,in particular China.With a second-half 2012 demand of over 5GW,the growth of the domestic market in China will provide welcome relief for Chinese c-Si manufacturers,more than offsetting any impacts from the recent US Department of Commerce ruling or potential'anti-dumping'filings within Europe.
In fact,most leading China-based solar module manufacturers are planning for greater demand this year,by as much as 30%above the 30GW mark.This optimism comes from year-end surges seen before in the solar industry,a greater number of emerging countries added to the solar demand-mix,and possible upside from new ground-mount projects whose return-on-investments are decoupled from(legacy)regional incentives.
Increased module shipments will be driven initially by downstream integrators,restocking inventories during third-quarter 2012 in expectation of the year-end demand surge.However,capacity expansion plans remain largely on hold for second-half 2012,with the exception of leading Taiwan cell makers that are currently running at maximum utilization levels following the preliminary ruling.
Having been the default means to reduce cost during 2011,polysilicon average selling prices(ASPs)are forecast to decline by less than 10%in second-half 2012.Therefore,c-Si manufacturers are now forced to prioritize non-silicon cost-reduction as the only means of combating continued module ASP declines.Together,total silicon and non-silicon processing costs are forecast to decline by 20-35%during 2012,but with the non-silicon portion set to fall by up to 50%.
During first-quarter 2012,module processing costs surprisingly became the largest part of total silicon and non-silicon costs.However as the least technically-challenging segment of the manufacturing chain,it is not surprising that module processing costs are now set to decline by the greatest amount.Leading China-based c-Si manufacturers are expected to reduce module costs by over 40%during 2012,with upside for further cost reductions in 2013.
Yet,despite these concerted efforts on cost reduction,c-Si module ASPs are forecast to decline by an even greater amount during 2012(25-45%).Therefore,while supply and demand equilibrium is set to provide a more stable industry environment,the focus on cost-reduction will remain the most important action item for manufacturers moving into 2013.
