Competition Heats Up In PV Module Market, Poor Profitability Suppresses Production Enthusiasm In September

SHANGHAI, Aug 31 (SMM) –

According to SMM statistics, China PV module output in August was about 53.7GW, up 15.2% from July. Compared to the 21.5% MoM increase in July, the pace of output growth in August slowed down. The output of PV modules in September may be 51GW, a decrease of 5% MoM, showing a phenomenon of production reduction.

According to SMM, future orders may be unstable in September. As of August 27, the total PV module bid winning capacity in August was about 10.72GW, a decrease of 50.9% MoM. In August, distributed projects required massive procurement and delivery. In terms of centralized projects, the large-scale procurement demand has not yet emerged. The overall terminal demand increased less than expected, resulting in insufficient market orders. The back-and-forth price negotiations between downstream terminals and PV module factories frequently occurs, causing some concerns and considerations about supply guarantees, and the enthusiasm for picking up goods has weakened. The actual output of PV module companies may decline in September.

At present, the profitability of PV modules has not been significantly restored. Leading enterprises manage to make decent profits due to the integration advantages and cost advantages. The third- and fourth-tier enterprises are still facing the pressure of losses. In this case, some small factories choose to reduce or stop production. Therefore, the production schedule in September will not improve. The silicon wafer price increase was small, while solar cell price negotiations are deadlocked. The scheduling production of PV module can meet the current terminal installation demand. PV module manufacturers are estimated to cut production, thereby reducing the purchase volume of solar cells, driving down the price of solar cells, thus relieving their own profit margins. However, there are frequent competition among PV module companies at lower prices. Under the current situation of high inventory levels, the possibility of PV module price increases is low, and the profitability will continue to be poor. Therefore, increasing PV module production seems impossible.

One reason for the decline in production schedule in September was the high production schedule of modules in early August. The high output of PV modules boosted solar cell demand, leading to higher prices, which then led to increased cost pressures on small-scale module companies. The market was severely differentiated, and market competition was intensified, and there was a large price gap between manufacturers. First-tier companies maintained low prices in order to ensure market competitiveness, while smallers ones intend to raise offers. The phenomenon of PV module cost and price inversion continues to exist.

PV modules have become the least profitable link in the PV module industry chain. Some small factories are even in a state of zero profit or loss. Meanwhile PV inventories remain under high pressure. Some enterprises began to reduce production. Therefore, the actual output in August fell by 2-3GW compared with the production schedule, which also reduced the enthusiasm for production schedule in September.