India, Brazil sustain imports of Chinese module while Europe ships in more than expected

China exported 21.9 GW of modules in January 2024, a 35% increase from 16.2 GW in December 2023, then exported 21.2 GW in February, a 3% month-on-month decrease, accumulating 43.1 GW of total export volume in 2024, a 45% increase from 29.7 GW in the same period last year. The top three importers of Chinese modules earlier this year were Europe, India, and Brazil, with their combined import volume accounting for 60% of the global market. The dominance of Europe can be attributed to faster-than-expected inventory depletion and early stockpiling due to the Red Sea Crisis. For India and Brazil, policy changes and the end of the fiscal year, respectively, sustained imports in January and February.


 

Europe

Europe imported 6 GW of modules from China in January, a 20% increase from 5 GW in December 2023, and 8 GW in February, a 33% month-on-month increase. During January and February, Europe imported 14 GW of modules, 18% less than 17 GW in the same period last year.

The PV market may not see a significant leap this year as energy crisis has alleviated since the beginning of this year without sudden events like the Russia-Ukraine war. However, imports in 1Q24 surpassed the 16.1 GW in 4Q23, suggesting an overall improvement.

Considering higher freight rates and delivery risks from late 2023 to early 2024, distributors drew inventory in advance. Statistics of InfoLink show module manufacturers’ inventory in Europe decreased by 50%. Modules shipped at the end of last year arrived in Europe in the first quarter of 2024. Manufacturers will continue deliveries, restocking Europe’s inventory in March and April. Therefore, imports sustained in the first quarter, which is usually a slow season. Since late 2023, most imports to Europe have been TOPCon modules. Market conditions are likely to improve during the transition from p-type to n-type. InfoLink sees an optimistic outlook for the European PV market as we enter the high season of the second quarter.

In February, spot prices for TOPCon modules came in at USD 0.125/W (FOB) in Europe, a slight decline from January’s USD 0.13/W. Module prices keep reaching new lows and will see limited room for further declines. Preparing for price hikes, module makers adjusted CIF, DDP, and DAP prices for exports to Europe. But final pricing hinges on negotiations with end users. For now, module prices seem to stabilize at USD 0.11-0.13/W in Europe, sustaining premiums of USD 0.005-0.01/W against other markets.


 

Asia-Pacific

The Asia-Pacific market imported 8.8 GW of modules from China in January, a 33% increase from 6.6 GW in December 2023, and 7.7 GW in February, a 13% month-on-month decrease. The region imported 16.4 GW of modules during January and February, a significant 193% increase from the 5.6 GW in the same period last year. Imports in the first quarter of 2024 will likely surpass the first half of 2023.

India and Pakistan were the largest markets for Chinese module imports in the Asia Pacific during January and February, together importing 10.9 GW modules, accounting for 66% of the region’s share. In January, India imported 4.2 GW, surpassing Pakistan’s 1.5 GW. In February, Pakistan took the lead with 2.6 GW, a 73% month-on-month increase, exceeding India's 2.5 GW, which marked a 40% month-on-month decline.

In January, the ALMM that takes effect at the end of March and demand from utility-scale projects underpinned cell and module imports. However, the MNRE announced on February 9 that projects “already placed module orders” and are at the “advanced stage of construction” before March 31 will qualify for the exemption. Later, the announcement was revoked on February 15 due to the ambiguity in the definition of “advanced stage.” Imports may have sustained in March before the fiscal year ends. After the second quarter, project developers may reduce purchases as the ALMM will likely limit the use of China-made modules for public tenders. The outlook for India in the second quarter depends on detailed ALMM regulations yet to be confirmed by far.

Imports to Pakistan have been increasing every month since late 2023. The country imported more in the first two months of 2024 than throughout 2023, indicating rapid growth. Due to Pakistan's steadfast partnership with China under the Belt and Road Initiative, their economic cooperation has become a significant catalyst for Pakistan's PV development. Numerous module manufacturers have signed MOUs for PV cooperation with local enterprises in Pakistan. Besides overseas enterprises initiating utility-scale centralized generation projects in Pakistan, more and more citizens installed residential PV systems due to the rising costs of traditional electricity sources, effectively driving demand in the Pakistani PV market and sustaining high import volume in the first half of this year.
 

Americas

The Americas imported 3.6 GW of modules from China in January, a 33% increase from 2.7 GW in December 2023, and 2.9 GW in February, a 19% month-on-month decrease. The region imported 6.5 GW during January and February, 44% more than in the same period last year. The total import volume of the first quarter of 2024 will be higher than the same period in 2023.

Brazil is the biggest importing country in the region, importing 2.7 GW in January and 2.3 GW in February. The 5 GW accounted for 76% of the total imports of the Americas within the two months and can be mainly attributed to the construction of utility-scale PV projects since late 2023 that boosted local module demand.

However, demand from the distributed generation sector weakened in late 2023 as the project deadline under Law 14.300 expired. In February 2024, the Chamber of Deputies passed an emergency act to limit the growth of distributed generation projects, small-scale power plants, and its free electricity market. The act could affect the public’s willingness to install PV systems, leading to a decrease in module imports in the second quarter. On the bright side, the Monetary Policy Committee (Copom) lowered interest rates in February, hoping to increase financing for PV projects. Additionally, the growing centralized generation sector will likely sustain the country’s module demand. In late 2023, the Brazilian government removed some modules from the ex-tariff list, imposed a 9.6% import tariff, and established a tariff rate quota mechanism. The mechanism only has limited impacts on project development costs, but as the quota is calculated semiannually, large-scale imports in the first quarter will affect purchases in the following three months. Therefore, Brazil’s module demand will shrink in the second quarter of this year.
 

Middle East and Africa

The Middle East imported 3 GW of modules from China in January, a 100% increase from 1.5 GW in December 2023, and 1.9 GW in February, a 37% month-on-month decrease. The region imported 4.8 GW during January and February, a 200% increase from 1.6 GW in the same period last year. The total import volume of the first quarter of 2024 will be higher than 2023.

Saudi Arabia was the biggest market for Chinese modules in the Middle East, shipping in 2.6 GW during January and February to account for over half of the region’s total import volume. The primary driver of the dominance is the release of utility-scale public tenders that stimulate demand. Furthermore, many Chinese manufacturers formed strategic collaborations with the Saudi government and local developers. With strong governmental support for PV development, Saudi Arabia continues to see a bright outlook for its PV market.

Africa imported 629 MW of modules from China in January, a nearly 55% increase from 407 MW in December 2023, and 690 MW in February, a 10% month-on-month increase. The totaled 1.3 GW was 44% more than 0.9 GW in the same period last year. The import volume in the first quarter this year is expected to be on par with or slightly higher than the same period last year. Morocco is the biggest market for Chinese modules in the region, importing 308 MW during January and February, accounting for 23% of the region’s total import volume. Morocco replaced the previous two largest importing countries, South Africa and Egypt, thanks to the short-term demand boost from utility-scale projects.

The first two months of 2024 saw Europe stockpiling in advance after faster inventory depletion, India and Brazil maintaining strong buying since late 2023, and significant growths in Pakistan and the Middle East. Given the better-than-expected performance, the global market will see a year-on-year increase in the import volume in the first quarter of 2024.

In the second quarter, India and Brazil will lose momentum due to the end of the fiscal year. Additionally, regulatory uncertainties regarding the ALMM will put off the Indian buyers. Meanwhile, Europe will enter a high season, with Pakistan, the Middle East, Africa, and other emerging markets catching up. Noteworthily, customs data from 2022 and 2023 shows an 8-12% quarter-on-quarter increase in import volumes in the second quarter. Overall, Europe's peak season will make up for the slowdown in India and Brazil, allowing a slight increase in global module demand in the second quarter of this year.