Prices across the PV supply chain have collapsed to new lows in the second half of 2016 due to plunging demand. Furthermore, quotes of PV cells and wafers are not expected to bottom out this September. The current market analysis indicates that most manufacturers are not achieving profitability, according to EnergyTrend, a division of TrendForce.
Looking ahead to 2017, the entire supply chain – from polysilicon to PV modules – will see supply exceeding demand significantly by 18~35%. In sum, EnergyTrend expects to oversupply to become quite severe.
Most PV enterprises still had an optimistic outlook in the second quarter of 2016 even though the market was showing weakness. They assume that the downtrend was cyclical and temporary. However, the second half of the year has seen a rapid freeze in demand.
Since the second quarter, EnergyTrend has been anticipating that demand would drop sharply in the second half of the year mainly because of the effects of China's installation rush. Much of the domestic demand for the second half of the year was shifted to the first half, when the installation rush caused the market to overheat. After the rush ended in June, China as the world's largest PV market fell into a slump and dragged down the rest of the global market.
Global PV market to witness stalled growth in 2017
Looking ahead to the fourth quarter and 2017, EnergyTrend expects India to maintain annual growth next year and remain as the bright spot in the global market. The scale of the PV markets in South America, the Middle and the emerging markets will also gradually expand. Nonetheless, 2017 will be mostly a disappointing year as demand in the U.S. and Japan will fall slightly due to changes in subsidy policies. Also, China may just be able to sustain the same level of installation as that of 2016. On the whole, the global PV market will be at a standstill in 2017 with the annual growth rate at zero for the first time on record.
EnergyTrend projects the global PV demand will increase by just 0.3GW from 63.4GW in 2016 to 63.7GW in 2017 even as the global supply expands significantly. For example, the worldwide production capacity of PV cells in 2017 will increase by 13~15GW compared with the prior year, leading to a massive glut in the market. Likewise, EnergyTrend expects that all other sections of the supply chain will see supply outpacing demand by 18~35%. This situation will not only last through the entire 2017 but may also extend to 2018.
EnergyTrend believes seasonal demand and the partial recovery of the Chinese market will help prices to rebound slightly after hitting the bottom later in the coming six months. However, the increase in supply will be a strong force that keep prices on a downtrend. Hence, the fourth quarter of 2016 and the entire 2017 will be buyer's market despite seasonal effects on prices.
