Market Analysis

Market Analysis April 2012 - Prices stable

Prices stable

With the exception of the “thin-film a-Si” category, prices have continued to fall in March. However, the fall in prices was much more moderate than the falls in recent months. Activity on our platform continued its strong shift towards crystalline modules, while thin film module activity showed a significant year-on-year decline. The most significant price shifts were observed in the case of Chinese Tier 2 manufacturers, which led to a fall of close to 4% in the “crystalline China” category in March. In contrast, the prices for Chinese Tier 1 manufacturers showed little activity and remained stable, due primarily to the very low availability of European warehouse stock. As a result, the price difference relative to Chinese Tier 2 manufacturers also grew and some buyers were prepared to accept price increases of more than 20%.

This also confirms the emerging trend already observed in February: namely that the strong downturn in module prices has noticeably slowed. In the second half of 2011, module prices were still in free fall and our price index registered monthly drops as large as 8% and more. Such price drops are not to be expected again in the coming months.

Developments in Germany, by far the largest demand market, dominated global price shifts in March. Ongoing discussions about a new amendment to the REA (Renewable Energies Act) begun in Germany in January continued in March. As expected, the compensation cuts originally scheduled for March 9 were postponed until April 1. This led to a situation in which demand was concentrated intensely on immediately available warehouse stock to enable the completion of projects before the deadline. As the desired modules were not always available at the prices estimated during planning, the big winners were Chinese Tier 2 manufacturers who had lowered their prices and were able to take advantage of the situation.

Due to the uncertain legal situation, the reluctance of the distribution channels to place new orders and replenish warehouse stock continued into the first two weeks of March, and led to very low availability of warehouse stock. However, the REA amendment was passed by the German Federal Parliament on March 9, and as resistance in the Federal Assembly seems unlikely, it is expected that April will see a normalization of the product availability situation. An additional transitional period lasting until June 30 2012, during which operators will still receive the previous compensation, has now been granted for projects for which an application to the power companies for connection to the grid was submitted before February 24. This should decrease dependency on immediately deliverable stock and allow more time for module procurement, further alleviating availability problems.