Chinese Tier-2 c-Si firms rollercoastering through 2Q12

Capacity utilizations for Chinese Tier-2 crystalline silicon (c-Si) modules plummeted to just 35% in 4Q11 and will go even lower until the beginning of relief in 2Q12, says IMS Research.

January 10, 2012 –¬†Chinese Tier-2 crystalline silicon (c-Si) module makers watched their (average) production capacity utilization rates plummet to just 35% in 4Q11, and will go even lower until the beginning of relief in 2Q12, says IMS Research.

2010 was a year of booming capacity expansion, that included most Chinese Tier 2 suppliers (with help from OEM supplier agreements with Chinese Tier-1 firms, among others), and everyone kept pouring it on expecting 2011 to be another banner year, explains Jessica Jin, PV market analyst at IMS Research. But of course then markets started jamming their brakes on solar adoption — global installs slowing to “just” a projected 25% growth in 2011, vs. 160% in 2010 — which has exposed suppliers’ massive overcapacity, so that 2012 module production will be nearly double the true market demand, she points out. Chinese Tier-1 firms, meanwhile, have kept pushing their own production levels even through toxic price erosion. Now the market has come to a point where inventory buildups, and Tier-1 suppliers alone, are just about able to meet the entirety of demand; and with OEM deals no longer necessary, less stable smaller suppliers are getting squeezed out.

The lower utilization is also impacting PV module prices: ASPs from Chinese Tier-2 PV module suppliers in 4Q11 were 37% lower than the same quarter a year ago. Module pricing for distributors, though, was 16% higher in December thanks to efforts to meet year-end rushes in major European markets.

Despite a punishing year (and especially half-year), look for some improvement among Chinese Tier 2 utilization levels during 2Q12, due to three factors: suppliers paring down inventory levels, most suppliers halt capacity expansions, and some suppliers exit the market entirely.


PV module utilization of Chinese Tier-2 suppliers. (Source: IMS Research)
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