China's module exports grew 24% YoY in first half, with demand in major markets rising

China exported 22.1 GW of modules in June, a 4% month-on-month increase from 21.2 GW and a 22% year-on-year increase from 18.1 GW in 2023. China exported 64.3 GW of modules in the second quarter, a 16% year-on-year increase from 55.2 GW. As of June, China has exported 131.9 GW of modules this year, a 24% year-on-year increase from 106.1 GW.

The top five markets for Chinese module exports were Europe, Brazil, Pakistan, Saudi Arabia, and India, with combined import volumes in June accounting for 73% of the global market. This month, imports to most markets increased, except for Europe. Driven by increasing imports to Pakistan and India, overall Chinese module exports to the Asia-Pacific also lifted.


 

Europe

Europe imported 9.3 GW of Chinese modules in June, a 14% month-on-month decrease from 10.9 GW and an 11% year-on-year decrease from 10.5 GW. Europe saw 30.5 GW of import volume in the second quarter, down 7% from 32.9 GW last year. As of June, the import volume reached 54.2 GW, down 13% from 62.4 GW last year.

In the second quarter, European ground-mounted project installations were delayed, given falling supply chain prices, reduced government subsidy projects, rising financing costs, and policy uncertainties. In addition, dropping traditional energy prices and the surge in PV power generation caused grid congestion, lowering installation willingness for residential PV systems. Due to the slowdown in demand and the restocking in early 2024, Europe's recent module inventory level has risen slightly. However, unlike last year, when distributors held most inventories, most module makers owned inventories this year. The change in storage patterns has limited the room for module price collapses. Given the timing, installation progress will slow down during the summer vacation from July to August. Accordingly, European demand for imports will continue to decline in the third quarter.

The Red Sea crisis in late 2023 continues to affect international shipping. Routes from China to Europe still need to detour around the Cape of Good Hope in South Africa, increasing fuel costs for ships and rising shipping costs, thereby bringing up module import costs for European developers and affecting their purchasing momentum. This year, the Red Sea crisis and the turmoil in Middle Eastern geopolitics remain unresolved. Some shipowners are still unwilling to resume navigation through the Red Sea, which will keep shipping costs for Chinese exports to Europe high. Although recent shipping capacity gains have slightly lowered overall prices, shipping rates remain high. Given various issues, European shipping momentum will be weaker this year.

In June, spot prices for TOPCon modules fell to USD 0.09-0.13/W (FOB) in Europe, averaging USD 0.115/W, down 6% from USD 0.122/W in May. Module prices may keep falling to USD 0.09-0.125/W in July due to price declines in European traditional energy prices, grid absorption issues, and ongoing supply-demand mismatches.


 

Asia-Pacific

The Asia-Pacific market imported 6 GW of modules from China in June, a 36% month-on-month increase from 4.4 GW and a 76% year-on-year increase from 3.4 GW.  The Asia-Pacific market saw 15.7 GW of inventory draws in the second quarter, up 73% from 9.1 GW last year. As of June, the volume was 40.5 GW, up 118% from 18.6 GW last year.

In June, Pakistan imported the most Chinese modules in the Asia-Pacific region, with 1.9 GW of modules, up 118% from 0.9 GW in May, accumulating 12.2 GW in the first half of the 2024. India followed with 1.2 GW of module imports, up 191% from 0.4 GW in May, accumulating 10.4 GW in the first half of the 2024. Import volumes of the two reached 53% of the Asia-Pacific market. While Australian import volume saw a 50% month-on-month growth, Japan, the Philippines, Thailand, and Korea all saw slight declines.

The Pakistani government is rumored to impose tariffs on imported modules in the first half of 2024, causing market panic. Hence, Pakistan imported abundant Chinese modules in the first quarter, followed by a monthly cut in import volumes in the second quarter. In mid-June, Pakistan's Finance Minister Muhammad Aurangzeb announced that no tariffs would be imposed on imported modules. As a result, both market panic and import momentum saw significant recoveries. Yet Pakistan's future demand still relies on local utility-scale centralized generation projects. As Pakistan imported a large volume of 12.2 GW in the first half of the year, module imports in the second half will grow slower.

Indian import volumes saw vertical plunges in April and May due to the ALMM since April. In response, the Ministry of New and Renewable Energy (MNRE) issued a new ALMM exemption regulation by late May: PV projects in Special Economic Zones (SEZs) or Export Processing Zones (EPZs) that generate power for green hydrogen production and start operations by December 31, 2030, are exempted from the ALMM.  The favorable policy caused a sharp rebound in Indian import volumes in June, boosting India's short-to-mid-term demand.  With the increasing import volumes for Chinese cells, India's demand for Chinese modules will reduce once local capacities are completed.
 

America

The Americas imported 2.9 GW of modules from China in June, a 13% increase from 2.6 GW in May, and a 52% increase from 1.9 GW in the same period in 2023. In the second quarter, the Americas imports reached 7.8 GW, a 16% increase from 6.7 GW last year. As of June, imports in the first half of 2024 reached 16.8 GW, a 17% increase from 14.4 GW last year.

Brazil remained the region’s biggest importing country of Chinese modules in June, accounting for 68% of the region’s total with 2 GW of Chinese module imports, a 6% month-on-month increase from 1.9 GW. The country accumulated 12.1 GW of Chinese modules imports in the first half of 2024.

In May, Brazil lowered the interest rates from 10.75% to 10.5%, which is conducive to centralized generation project financing and boosting module demand. In early June, the Brazilian Ministry of Mines and Energy (MME) included small-scale distributed generation projects in Special Incentive Scheme for Infrastructure Development (REIDI). Small-scale project developers will be exempted from paying a total of 9.25% PIS/PASEP and COFINS taxes for up to 5 years, stimulating the progress of distributed generation projects and sustain demand in Brazil. In addition, Brazil's imported modules exceeded the tax-free import quota in the first half of this year, and a 9.6% tariff will be levied. Brazil's imports in June still increased amid tariffs. However, a new round of tax-free import quotas will start from July to June 2025. The quotas limit will reduce from USD 1.13 billion in the first half of the year to USD 1.01 billion, which may affect imports from the second half of 2024 to the first half of 2025.
 

Middle East and Africa

The Middle East imported 2.8 GW of PV modules from China in June, a 14% increase from 2.5 GW in May, and a 119% increase from 1.3 GW in the same period in 2023. In the second quarter, the Middle East imported 7.6 GW of modules, a 130% increase from 3.3 GW last year. As of June, the region accumulated 15.5 GW of module imports, a 163% increase from 5.9 GW last year.

Saudi Arabia remained the region’s biggest importer in June, accounting for 61% of the region’s total with 1.7 GW of module imports, a 34% increase from 1.3 GW in May. The country accumulated 8.7 GW of Chinese module imports in the first half of 2024. Demand in Saudi Arabia is dominated by government’s public bidding projects. Recently, utility-scale centralized generation projects have also been increasing. In the long term, the Saudi Vision 2030 program will boost local demand and maintain an optimistic outlook.

Africa imported 1.1 GW of modules from China in June, a 24% increase from 0.9 GW in May, and a 11% increase from 1 GW in the same period in 2023. In the second quarter, Africa accumulated 2.7 GW of module imports, down 16% from 3.2 GW last year. As of June, Africa imported 5 GW in the first half of this year, up 4% from 4.8 GW last year.

South Africa were the region’s largest importers of Chinese modules, importing 437 MW in June, a 66% decrease from May’s 263 MW, accounting for 39% of the overall African market. The country accumulated 1.6 GW of Chinese module imports in the first half of 2024.

The South African government announced in June a 10% tariff on imported PV modules, causing market concerns and prompting developers to increase their imports in advance. Additionally, some foreign developers develop power stations in South Africa, driving short-term market demand. However, South Africa continues to face inadequate infrastructure, long grid-connection approval, and aging grids. In addition, the government imposing tariffs on imported PV modules will affect demand in the second half of 2024 and even in the long term.

In June, the European market experienced a decline in demand due to falling traditional energy prices, increased inventory levels, and delays in centralized installations. High freight rates and the approaching summer holidays will likely reduce imports in the near term.  In the Asia-Pacific market, Pakistan announced that it will not impose tariffs on imported modules, and India released a new version of ALMM exemption, both of which have brought benefits to the recent demand in the Asia-Pacific region. In Brazil, despite the tax-free import quota, imports will continue at the end of the second quarter. Notably, a new round of tax-free import quota will be implemented in the second half of 2024, affecting imports.

In the first half of 2024, apart from a month-to-month decline in the European market, other major markets saw an increase in Chinese module imports. In the second half of 2024, if the European market continues to face reduced demand and the Red Sea crisis impacts, the third quarter might be a weak peak season, and the traditional off-season in the fourth quarter could further affect overall imports in the second half of the year. For the Asia-Pacific market, in the second half of 2024, India and Brazil might keep their import volumes on par with the first half of 2024 due to policies despite a high chance of declines. On the other hand, the substantial growth of Pakistani imports in the first half of 2024 may result in import reductions in the second half. The Middle East market will benefit from the Saudi government's long-term goal of PV developments, which continues to release public tenders to stimulate local demand. Overall, non-China market's imports in the second half of 2024 will hardly grow, making it difficult to achieve the growth seen in the same period last year.