Q4'11 global industry end-market revenues reached $35.4 billion, their highest level since Q4'10, but are now projected to drop to $22.0 billion in Q4'12, a result driven by both lower volumes and prices. Over-optimism on shipments and production twelve months ago, together with weak global demand growth in the first three quarters of 2011, were the drivers of last year's pricing collapse through the PV chain.
“Major cell and module manufacturers are projecting shipment growth of 23% in 2012, considerably less than the 40% they had initially planned for 2011 at the same point last year. The acceleration of demand into 1H'12 will initially support these growth plans,” said Michael Barker, Analyst at NPD Solarbuzz. “However, the quarterly 2012 forecast anticipates the need for production cutbacks in Q4'12, resulting in only 13% shipment Y/Y growth by the end of 2012.”
The NPD Solarbuzz Quarterly report also finds that Chinese, Taiwanese and Rest of World manufacturers, who grew production share from 69% in Q4'10 to 78% in Q4'11, are projected to increase moderately to 79% by Q4'12. Upstream module inventory days dropped 24% Q/Q at the end of Q4'11, through a combination of production cutbacks and increases in shipments from some manufacturers in the final quarter. However, downstream companies were the primary beneficiaries of the Q4'11 demand boom, as their inventory days dropped by 81%.
Vertically integrated Western and Japanese manufacturers dealt with negative margins for the third consecutive quarter in Q4'11, while average Chinese Tier I gross margins declined from 12% to 7%. “Major PV companies no longer have the balance sheet flexibility to absorb large additional cuts in prices,” added Barker. “They will need to watch the supply/demand balance closely in order to avoid further pressure on gross margins.”
Source: NPD Solarbuzz Quarterly
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