Monthly module export exceeds 14 GW as overseas inventory draws rebound in January and February

Note: Starting from 2023, InfoLink classifies Pakistan as an Asia Pacific country instead of a Middle East country.

China exported 14.85 GW of modules in January, a 32% month-on-month increase and a 55% year-on-year increase. In February, the country exported 14.82 GW of modules, almost unchanged from a month earlier, and a 6% year-on-year increase. In the fourth quarter of last year, inventory draws from overseas markets were relatively slow since end users still held previously purchased modules in stock. The low season late last year was estimated to continue into the beginning of this year. However, recent customs data reveal a dramatic increase in inventory draws in January and February, close to that of the high season last year. This rebound shows how the impact of module stock is surprisingly transitional, underscoring a faster-than-expected growth of PV demand overseas.

Europe

Europe imported 8.6 GW and 8.4 GW of modules from China in January and February, respectively, a 120% and 48% year-on-year increase, and a 46% and -3% month-on-month increase. In 2023, the bloc imported 17 GW of modules from China, 77% more than in the same period last year.

In 2022, Europe imported 86.6 GW of modules from China. However, excessive inventory draws in the first half of the year led to a rapid increase in the volume of module stocks, causing the import volume of Chinese modules to drop continually in the latter half of the year. Meantime, the bloc only installed 40-45 GW of modules in 2022. Factoring in the DC/AC ratio and inventory in transit, there is still 20-30 GW of modules left to be utilized in 2023. Still, customs data from January and February show the European market recovering strong inventory draws, which the bloc expects to be necessary for it to accommodate the rapidly growing demand, despite the current stock level.

The import volume of Chinese modules in January and February 2023 measured up to that of the high season last year, despite the first quarter being the typically low season in Europe. This suggests the anticipation of increasing demand, fierce competition in the market, and manufacturers’ recognition of the importance of the market, thus stock up in advance to get on the ground when demand increases.
 

Asia Pacific

The Asia Pacific market imported 2.5 GW and 3.1 GW of modules from China in January and February respectively, a 17% and 24% month-on-month increase and a 13% and 47% year-on-year decrease. In 2023, the region imported 5.6 GW of modules from China, a 36% year-on-year decrease.

The decrease is mainly caused by India’s imposition of a 40% BCD on module imports last year. Local manufacturers imported large quantities of modules a quarter before the BCD took effect, resulting in a year-on-year decrease. The Indian market imported 8.9 GW of modules from China last year, 8.1 GW of which was imported before the BCD took effect. The demand dropped rapidly a quarter later, reducing the monthly average to merely 88 MW. Still, as demand increases evidently in early 2023, the import volume reached 395 MW in January and 643 MW the next month.

Asia-Pacific countries other than India posted a 27% and 116% year-on-year increase and a 3.4% and 16.8% month-on-month increase in January and February, respectively. The rising momentum is largely attributed to Japan, Australia, Pakistan, and other Southeast Asian countries.
 

Americas

The Americas imported 2.6 GW and 1.9 GW of modules from China in January and February, a 58% month-on-month increase and 24% month-on-month decrease, respectively. The region has imported 4.5 GW of modules from China so far in 2023.

Brazil is the main importing country in the Americas, importing 1.9 GW of modules from China in January, and 1.3 GW in February, totaling 3.2 GW, accounting for 70% of the import volume of all markets within the region. In January 2023, Brazil brought into force Law 14.300, charging distributed generation projects a grid fee, exerting a major impact on the country where more than 70% of PV projects are distributed generation projects. Given that, local manufacturers imported approximately 18 GW of modules from China in 2022. Although there was an evident decline in Chinese export volume in the last quarter of 2022, January 2023 saw a rebound of almost 90% to 1.9 GW, and February a solid 1.3 GW. The rebound may be attributed to the deadlines of previously applied grid connection projects, of which module demand persists from 2022 to 2023. Therefore, despite modules held in stock indicated by the grid-connected capacity, demand is still expected to sustain in 2023. Other major markets within the region include Columbia, Chile, etc. While their total demand is smaller than that of Brazil, their market size has increased significantly compared to last year. 
 

Middle East and South Africa

The Middle East imported 776 MW and 851 MW of modules from China in January and February respectively, a 1% and 10% month-on-month increase and both a year-on-year increase of more than 200%. The Middle East saw significant growth in 2022, with the UAE and Saudi Arabia being the major contributing countries. The two combined imported 1 GW, accounting for 62% of the region's total import volume. Hopping on the bandwagon of energy transition last year, Middle East countries launched a series of investment plans pertaining to green energy. Large-scale ground-mounted projects, several of which are still under construction, are the major sources of demand within the region. Chinese manufacturers have begun to expand their presence in the region. It is expected that The Middle East market is expected to continue growing in 2023, with price declines across the supply chain benefiting the development of its PV industry.

The demand for Chinese modules in Africa is relatively small, with a total of 3.4 GW in 2022. The region imported 393 MW and 544 MW of modules from China in January and February, respectively. South Africa currently dominates the African market, taking up 61% of total demand within the region. While coal remains the main source of power generation in South Africa, PV power generation has become one of the solutions to the severe power shortage last year. In January and February, South Africa imported 571 GW of modules from China, more than a triple increase over the same period last year. South Africa is now the key country for PV development in Africa.

Owing to the strong inventory draws in the first half of 2022, China saw an overall decline in module export volume during the second half of the year. Still, customs data from early 2023 show inventory draws recover rapidly in several markets, despite installation being far slower than module imports. Given that, the industry shall rethink the effect inventory has on demand, and how manufacturers' strategic allocation amid fierce competition will affect the inventory draws. Overall, inventory draws in several regions suggest that manufacturers are more optimistic about the growth of the PV industry in 2023. Still, policy shifts and the influence of stock accumulation are to be heeded consistently. Although the first quarter is traditionally the low season for overseas markets, InfoLink expects only a modest increase in the second quarter compared to the first quarter.