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| Author | Kyle Lin |
| Updated | October 27, 2023 |
Chinese customs data show China exported 19.8 GW of modules in September, up 14.5% from 17.3 GW in August and 55.9% from the same month last year. Cumulative exports from January through September totaled 157.7 GW, a 29.9% year-on-year increase.
Europe
Europe imported 7.6 GW of modules from China in September, down 6% from 8.2 GW in August while unchanged from the same month last year. From January through September, Europe imported 85.3 GW of modules, up 25.8% year-on-year.
China's export volume to Europe dropped marginally in September after a slight rebound in August. Monthly export volumes in the third quarter were close but showed a 9.8% year-on-year decline. This was driven by large inventory draws from Europe in the first two quarters of this year, resulting in inventory accumulation. Consequently, the market cooled down significantly in the third quarter, which is a typical peak season. Overall, demand in the European market will be evidently lower in the second half of this year than in the first half.
Currently, demand picks up slightly as the construction period before winter nears. Module inventory accumulation has somewhat let up but with a certain amount of remaining. Module prices decline at a slower pace, sitting at EUR 0.11-0.145/W in the spot market at the end of October. Demand will be sustained in the fourth quarter if inventory accumulation continues to improve, seeing only the usual year-end marginal decline.
Asia-Pacific
The Asia Pacific market imported about 7 GW of modules from China in September, up from August by 58% and 270% year-on-year. From January to September, the market imported 33.4 GW of modules, surpassing last year's total of 31.5 GW.
India was the major contributor behind the increase in September, with imports reaching 2 GW, up 112% month-on-month. Demand notably surged in the third quarter from the previous two, driven by the recent plummets in module prices. Projects previously deferred due to high module prices and the 40% Basic Custom Duty (BCD) have now commenced construction, significantly pushing up demand for Chinese modules in August and September. Additionally, India continued to conduct large-scale tenders, boosting demand from ground-mounted projects. Strong inventory draws will persist until the implementation of the Approved List of Models and Manufacturers (ALMM) and the end of extended project deadlines in the first quarter of next year.
Americas
The Americas imported 2.7 GW of modules from China in September, unchanged from August and up 29% year-on-year. The cumulative imports since January have reached 22 GW, up 14% year-on-year.
Brazil was the main force underpinning import volume in September. Despite a significant decrease in local distribution sales after the first quarter and manufacturers continuously clearing inventory at low prices, Brazil's import volume in September equaled that in August. Due to module price drops, Brazil's residential market still maintains some return on investment. Therefore, Brazil sustains demand even under the new electricity framework unfavorable to distributed generation projects. It is worth noting that centralized generation projects have rapidly risen this year and will drive the market's growth in the second half of the year.
Other factors affecting the market include the removal of the module tax exemption, which has been discussed in the Brazilian market since July, pending an official announcement. Considering the expectation of manufacturers and the growth of centralized generation projects, the removal will boost the module inventory draws in recent terms.
Middle East and Africa
Middle East imported 1.8 GW of modules from China in September, up 19% month-on-month and up 139% year-on-year, bringing the cumulative imports since January to 10.3 GW, up 58% year-on-year.
The increase is largely attributed to Saudi Arabia, which had a demand of 1.2 GW in September, accounting for 63% of the region’s total. The country had imported 5.2 GW modules as of September, a substantial growth compared to 1.2 GW last year. In Saudi Arabia, PV demand was mainly driven by tenders of multiple utility-scale centralized generation projects. Additionally, strong government support attracts Chinese manufacturers to establish factories in the country, making it the fastest-growing emerging market this year. The country will launch more utility-scale projects to achieve the national renewable energy target. Long-term demand looks promising.
Africa imported 582 MW of Chinese modules in September, up 22% month-on-month and up 117% year-on-year, bringing the cumulative total since January to 6.6 GW. South Africa was the major source of demand in the region this year, with imports reaching 3.8 GW since January. Despite the short-term demand growth driven by the urgent need for energy transition, as well as extensive policies and state-owned power company reforms in the first half of this year, inventory draws declined significantly in the third quarter. This indicates that although there is enormous demand in the long run, challenges, such as inadequate infrastructure and the slow process of national renewable energy procurement, still need to be addressed.
Overall, the subdued performance of the European market in the third quarter aligns with earlier expectations. Recently, slower inventory draws ameliorated the inventory issue, which, however, will persist into the first half of next year. Meanwhile, markets like India and Brazil have outperformed expectations and are anticipated to maintain a certain level of demand until the end of the year.
In the fourth quarter, module makers may cut prices for orders to achieve shipment targets while ramping up new capacities. However, their production plans show a wait-and-see attitude, indicating a market less enthusiastic than expected. Coupled with weakening demand in Europe, the module import-hub, inventory draws from non-China markets in the fourth quarter of this year can hardly return to levels of the first half.