China's reactions dictates the global market
Seasonality and policy incentive deadlines from the end-market in China drove global solar photovoltaic (PV) demand down to 6.2 gigawatts (GW) in 1Q'13, down 23% Q/Q. Over the next four quarters, China will account for more than 20% of global PV market demand, ranging between 0.9 and 3.6 GW, according to the new NPD Solarbuzz Quarterly report, but its volatile PV demand cycles will create new supply challenges for leading PV manufacturers.
"Chinese solar PV demand was the key global driver at the end of 2012, which helped to deplete upstream inventory levels that had accumulated over previous quarters," said Michael Barker, senior analyst at NPD Solarbuzz. "However, extreme swings in PV demand from China over the next year will make capacity utilization and inventory control particularly challenging. At the same time, demand from other global PV markets is beginning to offer predictable quarterly demand levels that are essential for long-term planning."
Germany, Italy, France, and the UK will lead solar PV demand in Europe over the next four quarters, accounting for over 65% of regional PV demand. European solar PV demand will no longer be dominated by policy deadlines, so demand in that region will be relatively flat Q/Q. Over the next four quarters, demand from European end-markets is expected to range from 2.7 to 3.2 GW.
PV demand outside China and Europe will be driven by the U.S. and Japan, which exhibit different phases of demand. The Japanese market is strongest during the first half of the year and the U.S. market is strongest during the second half. Combined with new demand from the emerging PV markets, such as the Middle East and Southeast Asia, this rest-of-world (ROW) group will also provide stable PV demand over the next four quarters, ranging from 2.5 to 3.6 GW each quarter.
"Volatile demand swings will continue to hamper the growth of the solar PV industry over the next four quarters, with production and shipment schedules having to be adjusted each quarter," added Barker. "These effects will have the most profound impact on suppliers that rely upon China as the dominant end-market for shipments. Suppliers that are focused on Europe, Japan, and the US will see more stable quarterly demand trends, and will be able to plan production schedules with far greater visibility."
