Market Analysis September 2012 - Low activity level

The price reductions of module manufacturers, in response to feed-in tariff cuts in several important markets, resulted in increased market activity and stronger global demand in August compared to the month of July. After the module price declines of tier 2 manufacturers in late July, tier 1 manufacturers followed by the middle of August as sales had slowed down. Overall, a downward trend was observed in all of the categories in the first two weeks of August. In the second half of August prices stabilized, however returned to the lower level and remained unchanged until the last week of August. As a result, all six values of our price index for August are below the ones in July.

Compared with July, the decline for crystalline module prices in August was stronger compared to thin film modules. The largest price decline was again observed in the category of "Crystalline China" with 4.7%. Thus, the price decline in this category adds up to 22.8% since the beginning of the year and 41.3% below the previous year. Despite the temporary stabilization of prices towards the end of August, we assume that the value will continue to fall in September, though not as strongly as in August. Due to the very low price levels for modules from tier 2 manufacturers, we believe that the further decline will rather be driven by lower prices for modules from tier 1 manufacturers in the fourth quarter.

Module prices of German manufacturers are on average still priced lower than those of Japanese manufacturers. In August, the prices in the category "Crystalline Germany" fell by 3.3% and 17.8% since the beginning of the year. Compared with August 2011, the value has fallen by 36.7% in the last 12 months. German manufacturers continue to suffer in their main markets from increased price competition of Chinese manufacturers. In addition, clearance sales of insolvent or financially troubled manufacturers also affect the prices in this category. Again, we assume that the price decline will continue. In the fourth quarter, the fall might even be higher than the one in the category "Crystalline China".

The smallest price decline in August was observed in the category "Crystalline Japan" with 2.2%. This trend is in line with the development since April 2012. Until now, prices have only decreased by 13.3% since January 2012 and 31.5% compared to August 2011. This is mainly due to the fact that the domestic market in Japan is dominated by Japanese manufacturers. As a result of the nuclear disaster in March 2011, photovoltaics were continuously promoted, leading to a rapid growth of the Japanese market and therefore the dependence of manufacturers on exports was greatly reduced. In the short and medium term, we therefore assume that the prices will remain higher in this category and the price decline will remain more moderate compared to other categories.

The price decline for the three categories of thin film modules was more moderate this time and ranged from 1.7% to 3.4% in August. Compared with previous year, the values for all three categories fell by 40.3% up to 41.9%. For the remainder of the year, we don`t expect the category "Thin film CdS / CdTe" to further decline. In the "Thin film a-Si" and "Thin film a-Si/μ-Si", however, we expect an additional decline from 10% to 13% until the end of the year driven by the price pressure from crystalline modules.