The scheduled module production of PV modules in China for August is expected to be 48.5 GW, up approximately 3.6% MoM

According to SMM statistics, China's PV module production in July was approximately 46.8GW, down 0.9GW from the previous month, down 1.9% MoM; up 4.1% YoY. From January to July 2024, China's cumulative PV module production was approximately 325.7GW, up 61.7GW YoY, an increase of about 23.4%.

In July, the demand for PV modules did not show significant improvement, and the installation progress remained stable. On the domestic demand side, the distributed PV installations in provinces such as Jiangsu, Zhejiang, and Guangdong actively drove the market, especially with favorable industrial and commercial installations, mainly due to the rising demand for green electricity in the manufacturing sector. Residential installations were slightly weaker, with some traditional provinces experiencing a YoY decline in new residential installed capacity in H1. Provinces like Jiangsu, Shaanxi, and Henan have all issued policies regarding distributed PV projects, optimizing workflows and requiring quick grid connection, focusing on enhancing the comprehensive carrying capacity of the grid. For new projects exceeding the remaining grid capacity, if the owners are willing to accept lower utilization rates, grid connection can still be arranged. Many provinces are planning to upgrade and expand grid capacity by 2025, but under current conditions, insufficient grid capacity and unstable returns on PV system generation remain concerns for distributed PV developers, leading to low expectations for improvement in the growth rate of distributed PV installations in the future. On the demand side for centralized projects, regions such as Yunnan, Xinjiang, Sichuan, and Inner Mongolia are expected to have many projects connected to the grid recently, with concentrated procurement and delivery demands, mainly driving the module order delivery demand in July and August.
Although some centralised procurement orders in the domestic market supported demand, the pull from overseas markets weakened. Europe also entered the summer break, causing project procurement progress to stall. Currently, overseas buyers are more focused on low prices for PV modules, intensifying price friction with module companies. Additionally, with shipping costs continuously rising, the profit margins for overseas markets have further narrowed. As a result, the marginal export volume to regions including Europe and Latin America has decreased. Although the export volume of PV modules in June reached a new high for H1, it is unlikely to maintain high levels in July and August.
In terms of supply, due to overall weak demand, the actual production of some module companies in July was lower than expected, and they reduced production to avoid inventory accumulation. Integrated module manufacturers, in particular, maintained cautious operating rate adjustments due to continued losses. These manufacturers are suffering losses in multiple segments, and when the price of N-type modules was 0.77 yuan/W in July, the loss rate reached 1%-5%. In contrast, although specialized module manufacturers have a temporary advantage in cost and profitability due to the low price of solar cells, they lack brand influence, product quality and stability, technology, and supply compared to leading companies, resulting in lower orders on hand. Therefore, mid-to-late stage module manufacturers are trying to obtain orders through low-price strategies, but their competitiveness is weak, and the actual orders on hand are still insufficient. Some companies only take on OEM orders, and the number of manufacturers halting production has also increased.

For August, the scheduled PV module production is expected to be 48.5GW, up 1.7GW MoM, an increase of approximately 3.6%; compared to the same period last year, it is a decrease of about 8.6%. Due to the overall poor visibility of order demand, the production schedules of various companies have diverged. With the peak delivery season in H2 approaching, especially with the grid connection of large base projects, some companies have significantly increased their operating rates due to increased orders, with adjustments ranging from 20% to 40%. Most companies, considering their order volumes and inventory pressure, have chosen to maintain stable operating rates or make slight reductions. Currently, the days of finished product inventories in the module industry are between 1 to 1.5 months, with industry-wide finished product inventories exceeding 50GW. A few companies are facing inventory pressures with days of inventories approaching 2 months. In the face of inventory pressure, companies are first attempting to ship at low prices, and low-priced modules in the market are gradually shifting from low-efficiency to high-efficiency modules.
In August, the proportion of scheduled module production for N-type modules further increased to 89%. In July, the proportion was 84%. Since July, more than 90% of the selections by downstream end-users in the power sector have been for N-type modules, and some centralised procurement projects have stopped purchasing P-type modules. As a result, module companies are actively adjusting the production ratio of P-type and N-type modules, with some companies shutting down P-type module production lines. The proportion of scheduled module production for N-type modules by leading companies has approached 90%.