Photovoltaic modules piled up like mountain Chinese PV companies are overwhelmed

In China's Jiangsu Province, the photovoltaic components that have built up mountains are being piled up in Changzhou Trina Solar's factory. The value of these components is also rapidly evaporating.

Analysts said that the inventory of Chinese PV companies such as Trina Solar, Suntech Power, and Yingli Green is about 5GW, which is almost one-sixth of the annual demand of the global market.

According to the average sales price of 87 cents per unit in the second quarter, the value of these stocks is about US$4.5 billion, but the current oversupply in the market means that prices will still fall rapidly.

At present, China's PV companies are facing a huge amount of anti-dumping tariffs in the United States and anti-dumping duties that may be launched in the European market. Chinese companies have little choice but to sell surplus stocks at low prices in China.

IHS analyst Stefan de Haan said that with the launch of anti-dumping investigations in Europe, Chinese companies are currently avoiding shipments to Europe. In the next few weeks, perhaps the inventory will increase further.

At present, photovoltaic companies have started to cut capacity, but this still has a long way to go. It is reported that the annual production capacity of China's PV modules is 50GW – far higher than the annual demand of 30GW globally.

According to IHS's forecast, in China, the module price has dropped to a low point, and the agency predicts that module prices will further fall below 58 cents per watt. On the other hand, component prices in the United States, Canada, and Mexico will drop to 69 cents per watt.

European photovoltaic market pain
According to data from Thomson Reuters, at present, Chinese companies have about 110 days of inventory of photovoltaic modules, while the global average inventory is only 42 days, which is three times that of the latter.

Under this situation, on Monday, Suntech Power, the world's largest photovoltaic module manufacturer, announced that it will cut its cell-sheet production capacity.

Trina Solar spokesman Thomas Young said that in order to get rid of excess inventory, Trina Solar has cut production and increased sales in the Chinese market. The company is looking for emerging markets.

Need to drastically reduce production capacity

GTM Research analyst Shyam Mehta has said that about 15GW of production capacity in the Chinese market needs to be “retired” so that supply and demand can restore balance.

Thiemo Lang, Senior Product Manager of Sustainable Asset Management in Zurich, Switzerland, said that given the continued pressure on prices, prices remain at a current level, but it is still sensible to keep inventory at the highest possible level and actively sell.

In the second quarter, most Chinese PV companies have written down their inventory, and the market value of these companies' stocks has evaporated by about three quarters in the past year.

With the closing of European and American markets, Chinese companies have to turn to the domestic market for Western Europe, but in order to cater for production, the domestic market may have to expand significantly.

GTM analyst Mehta believes that China's PV product sales will jump to about 3.5 GW in the second half of this year, compared to 2 GW in the first half of the year.

Although many companies have reduced their inventory significantly, the inventory periods of SunPower and First Solar of the United States are only 15 days, which is far lower than that of Chinese PV companies. Even these two US companies are the few profitable PV companies in the second quarter.