Overseas inventory draw slowed amid piling up inventories

China exported 14.5 GW of modules in July, a 19.8% month-on-month decrease from 18.08 GW in June and an 8% decrease compared to July 2022, according to customs data compiled by InfoLink. The nation exported 120.6 GW this year, a 27.7% year-on-year increase.


 

Europe

China exported 7.1 GW of modules to Europe in July, a 32% decrease from the 10.5 GW in June and a 22% decline from July 2022, the first negative year-on-year growth in 2023. From January to July, Europe imported 69.5 GW of modules, a 35% growth from the same period last year.

This decrease is largely attributed to the evidently shrinking European demand in July. In addition to high inventory levels due to massive inventory draws since earlier this year, the local summer break affects demand and prices. For now, module prices come in at 0.15-0.17 euros per watt in Europe, with the low-price range sitting below that of the Asia-Pacific market, a rare occasion before, indicating muted short-term demand. Despite the consecutive decline over the past two months, temporary slowed inventory draws help the market deplete inventory. European demand may recover after the summer break ends and before the winter break starts as projects initiate construction.


 

Asia-Pacific

The Asia-Pacific market imported 3.4 GW of modules from China in July, little changed from the volume of June and a 41% growth from the same period last year. As of July, the region imported 22 GW of modules. Australia and Japan are the two primary sources of demand in the Asia-Pacific region. Both are mature PV markets with steady demand.

Imports to Uzbekistan soared, with its monthly demand reaching 350 MW. Presumably, this is a short-term increase induced by the inventory draws of utility-scale projects.

Since the implementation of the BCD in April 2022, Indian manufacturers started to import cells to manufacture modules on their own. As a result, the demand for Chinese modules decreased rapidly, coming in at merely 2.5 GW during January and July. Meanwhile, demand for Chinese cells surged to 4.2 GW, with the monthly demand reaching 1.4 GW in July, indicating local projects initiating as prices fall. Module demand could rise in the second half of the year and the first quarter of next year after the implementation of ALMM and the approach of deadlines for some extended projects.
 

Americas

The Americas imported 2.3 GW of modules from China in July, up 19% month-on-month and down 15% year-on-year. The region imported 16.6 GW during January and July, a 12.8% growth from the same period last year.

Brazil, the major driving force behind the month-on-month growth, imported 1.4 GW of modules from China in July, up 17.6% from the month prior, ending the consecutive decrease since March. Module demand has weakened marginally as the installation rush of distributed generation projects faded. Currently, prices are relatively low in Brazil, coming in at $0.14-0.15/W for PERC products and $0.155-0.16/W for TOPCon ones, given inventory issues and numerous manufacturers competing on the market. A great number of pending centralized generation projects will underpin the market. Centralized generation projects will take up an increasingly larger share of the country’s total demand.

Inventory draws in Chile, another market that has grown notably this year, have weakened in June and July, presumably due to the short-term fluctuation of shipments for utility-scale projects.
 

Middle East and Africa

The Middle East imported around 1 GW of modules from China in July, a 21% month-on-month decrease and a 12 % year-on-year decrease. The region imported 6.9 GW of modules during January and July, up 42% from the same period last year.

Demand in the Middle East comes primarily from Saudi Arabia, UAE, and Israel. Saudi Arabia, in particular, grew rapidly in the fourth quarter of 2022 and has imported 3.2 GW of Chinese modules so far this year, accounting for around 46% of the demand in the Middle East. With the development of multiple large-scale ground-mounted projects, the country will maintain a long-term and steady demand.

Africa imported 690 MW of modules from China in July, down 31% from a month prior and up 103% from the same period last year. Africa imported 5.5 GW of Chinese modules during January and July, with Africa accounting for 63%.

South Africa’s PV demand surges this year, mainly due to its urgent need for energy transition. Long-drawn power rationing had the authorities introduce generous tax credits to bolster local demand for distributed generation projects. Besides South Africa, demand in other African countries, such as Egypt, Morocco, and Nigeria, shows signs of increasing, albeit relatively small.

Europe wields great influence on the overall overseas market. The notable decline in overseas inventory draws in July reflects the impact of the high inventory level. The temporarily weak inventory draws manifest the market’s effort in inventory control and alleviates inventory issues. Additionally, installations will pick up in Europe in the future. Therefore, the much-heeded issue of high inventory level will recover in the second of this year. However, considering the ambitious production plans and shipment targets of module makers, inventory levels will remain at a certain degree and fluctuate.

In the long term, the decline in investment costs following price drops amid oversupply will benefit the development of overseas markets Nevertheless, whether installation progress and grid capacity can catch up with the rapidly increasing demand requires further attention. Otherwise, oversupply will continue affecting demand as module makers keep shipping at large volumes.