Disparate growth in overseas markets amidst inventory impact

China exported 18.08 GW of modules in June, a 5% month-on-month decrease from the 18.99 GW in May, according to Chinese customs data compiled by InfoLink. The nation exported 106.1 GW of modules in the initial half of 2023, a 35% increase from 78.7 GW during the same period last year, indicating strong growth in non-China markets in the first part of this year.


 

Europe

Europe is the major importing market of Chinese modules. In June, 10.5 GW of Chinese modules entered the bloc, a 16% year-on-year increase and a 12% month-on-month decrease. Europe imported 62.4 GW of modules from China in the first half of the year, a 47% year-on-year increase.

Usually, the second and third quarters are the high season in Europe, with a significant increase in the second. However, after expectation-beating growth in the first quarter, Europe only exhibited an 11.53% increase in the second quarter, far lower than the 54% in the same period last year. The tepid demand can be attributed to stockpiled modules due to large inventory draws in the first quarter and the unhurried installation progress of European countries. 

In the third quarter, due to the vacation during July and August, inventory draws only slightly slow down. Provided countries do not ramp up installations, impacts of high inventory levels will persist. Module makers seal orders with European buyers at lower prices for the second half, reflecting price fluctuations across the supply chain and temporarily sluggish demand. Against these backdrops, European demand will flatten, even decrease marginally in the third quarter of this year.
 

Asia-Pacific

The Asia-Pacific market imported 3.4 GW of Chinese modules in June, presenting 34% month-on-month and 24% year-on-year increases. In the first half, the region imported 18.6 GW of modules from China, a 2% year-on-year decrease.

Australia and Japan are the two primary sources of demand in the Asia Pacific region, each importing 650 MW and 620 MW in June. Both of the two are mature PV markets with steady demand and incentive policies, of which focus switch to to distributed generation projects, such as residential and C&I projects. This year, module prices fall back, creating a better buying environment. Still, actual demand from installations hinges on policy trajectory and economic prospects. Annual demand requires further observation.

In India, module demand came in at 300 MW in June, a modest month-on-month increase. Due to the end of the fiscal year in the first quarter, module inventory draws in the second quarter slightly decreased. In addition to module demand, India’s cell demand has picked up substantially this year, vaulting the country to the No. 3 slot among importing markets of cells from China. The imported Chinese cells are made into modules that satisfy local content requirements of projects.
 

Americas

The Americas imported 1.9 GW of modules from China in June, a 19% month-on-month decline, with Chile accounting for the biggest setback presumably due to inventory draws from utility-scale projects.

Brazil is the main source of demand in the Americas, importing 1.2 GW of Chinese modules in June, down 7% from the month prior. The country imported 9.1 GW of Chinese modules in the first half of this year, a marginal year-on-year increase.

Brazilian inventory draws have been slowing after the first quarter. This is attributed not only to stockpiling activities since the first quarter but to the gradual end of the installation rush initiated by the new electricity framework launched this year. Long-term, underlying demand again underpins inventory draws from Brazil.

Chile is one of the prominent emerging markets in the region, with its utility-scale ground-mounted projects posting significant growth this year. The country imported 2.16 GW of modules from China in the first half of this year, a whopping 72% year-on-year increase.
 

Middle East

The Middle East imported 1.3 GW of Chinese modules in June, a 26% month-on-month increase, and 5.9 GW in the first half of this year, up 60% from the same period last year.

Saudi Arabia is the major driving force behind the growth in the Middle East this year. The country imported 791 MW of modules from China in June, a 48% month-on-month increase, and 2.6 GW in the first half of this year, seven times more than that in the same period last year, making it one of the fastest-rising emerging countries.

Utility-scale projects account for module demand in Saudi Arabia. Inventory draws from these projects affect the country’s monthly import volume. Therefore, there is no distinct high or low season. In the second half of this year, project initiations will prop up the robust module demand.
 

Africa

Africa imported 1 GW of modules from China in June, down 15% from a month prior, mainly attributed to the decrease in South Africa. As the key PV market in Africa, South Africa imported 520 MW of Chinese modules in June, a nearly 40% month-on-month decline. The country has imported 3.2 GW of Chinese modules so far this year.

South Africa’s PV demand surges this year, largely due to long-drawn power rationing. The government and residents turn to residential PV projects to make up for the power shortage. Authorities introduced generous tax credits. The Minister of Electricity visited China in person to seek help in tackling energy crisis. The electricity supply constraint boosts PV demand, but the challenge lies in the country’s installation capability and the comprehensiveness of grid facilities.

Non-China markets exhibited disparate growth in June. Quarterly year-on-year growth in the first quarter this year was 37%, and in the second quarter slightly lower at 33%, reflecting the impacts of stockpiles and excess inventory draws in the first quarter.

In the third quarter, since countries have yet to ramp up installations, high inventory will continue restraining imports in the second half of this year, despite module prices sitting at the low point and bolstering demand. Inventories in Europe and Brazil will impede the growth of demand, even causing decreases, affecting global demand.