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| Author | Albert Hsieh |
| Updated | August 31, 2022 |
Upstream prices continue to rise in the second half on polysilicon manufacturing accidents, equipment inspection and power rationing. Module demand was originally expected to wane in overseas markets, as they already imported a lot in the first half, with some inventories still piling up. However, customs data compiled by InfoLink shows China export 15.7 GW of modules in July, the highest volume on record, with a 121% year-on-year increase. Cumulative export volume of the year reach 94.4 GW, a 105% year-on-year increase. Overall, module export remains strong in July.
China’s monthly module exports grow continuously, reaching similar level or even doubled compared to the same period last year. However, the month-on-month increase has started slowing down since May, sustaining at merely 3% in July, suggesting that China may have seen its peak of module export per month this year.
Regional markets
Europe is the biggest importer of modules from China in 2022. The bloc imported 9.13 GW of modules in July and 51.5 GW so far this year, accounting for 55% of China’s total module export volume. Therefore, when the month-on-month increase of export to Europe slowed in May, China’s module export was effectively impacted.
Europe’s import volume saw little increase in recent terms. Still, it will remain a major market for Chinese PV products in the long run, given regional conflicts, energy crunch amid extreme weather, and roll-out policies favoring renewable energy, such as REPowerEU, EU Solar Energy Strategy, European Solar Rooftops Initiative, and European Solar Initiative, and its goal to accumulate 320 GW of installed PV capacity by 2025, and 600 GW by 2030.
Presently, module makers want to adjust pricings, as euro-to-dollar exchange rate dips continually. However, subject to limited end user acceptance, module price quotes stay elevated within USD 0.285/W, and trading prices sitting at USD 0.265-0.285/W. Additionally, serious labor and inverter shortages delay installation by two to three months. Some module makers had strategic stockpiles in the first half of the year. The increase of export volume to Europe per month shrinks in customs data and is expected to stabilize afterwards.
The Asia-Pacific and Middle East saw import volume surge from May onwards and then stabilized. The Asia-Pacific market imported 2.0 GW of Chinese modules in July, and 19.2 GW so far this year, each being a 22% and 58% year-on-year increase. The Middle East imported 1.6 GW of Chinese modules in July, and 7.1 GW so far this year, each being a 178% and 86% year-on-year increase. End users in both regions have lower price acceptance. For now, module prices come in at USD 0.255-0.275/W and are not likely to drop, due to upstream price hikes in the third quarter. As a result, there will not be significant increase in module import volumes.
The Americas imported 2.7 GW of modules in July, and 14.7 GW so far this year, each being a 169% and 106% year-on-year increase. The major contributor behind such growths are Brazil, Chile, and Mexico. The three see import volumes keep rising, together making up nearly 90% of total module imports from China to the Americas, boosting demand of the continent.
Brazil accounts for 73% of total import volume of the Americas. The country will charge distributed generation projects a grid fee from 2023 onwards. Since distributed generation projects take up a larger share of the country’s total installed capacity, installation rush prior to the implementation of new regulation will underpin module demand. Despite huge demand, prices hardly rise in Brazil. Module makers are commonly seen scrambling to secure market share with price quotes lower than USD 0.26/W. In regions of the Americas other than the U.S., module prices sit at USD 0.27-0.28/W.
Africa imported 0.3 GW of modules in July, and 1.9 GW so far this year, each being a 11% and 35% year-on-year increase.
Market outlook for 2H22
In the second half of 2022, extreme weather and regional conflicts send prices for traditional energy skyrocketing, driving up demand for PV and other renewable energies. Attention shall be paid to Europe, the biggest buyer of Chinese modules, of which higher price acceptance can alleviate cost pressure for module makers.
Supply chain price hikes derailed the more price-sensitive utility-scale projects in China in the first half of the year. Distributed generation projects are also delayed recently, as price quotes reach a peak at RMB 2/W. With domestic demand in inertia, overseas markets become a major sales channel of module makers. However, prices stay obstinately high in overseas markets and will put a cap on module demand. Against these backdrops, module makers try to reduce production costs by optimizing designs or seek discounts by signing long-term contracts with upstream sectors.