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© david alary dreamstime.com Analysis | August 01, 2014

Effects of US-China trade war to emerge next year

PV manufacturers are now on their toes anticipating the preliminary verdict for product dumping announcement by the end of July.
Prices within the PV supply chain continue to drop due to low season and weak demand in China and Japan. Among all, Taiwan’s cell prices have declined significantly. “Taiwan’s first-tier cell manufacturers could stick to the price of US$0.40/watt before mid-June because Chinese manufacuturers rushed their shipments to the US ahead of time. However, price gap between Chinese and Taiwanese manufacturers has shortened within simply a month after Taiwanese manufacturers lost Chinese orders by the end of June. Although the decline in wafer prices was not as severe as cell prices, Taiwan’s wafer manufacturers managed to fully utilize their productions strategically. Yet, wafer prices may be lowered further as it requires more time to clear out wafer stock during low season,” said Corrine Lin, analyst of EnergyTrend, a subsidiary of Taiwan-based market intelligence firm TrendForce.

Fulfilling the US Demand, High Level of Inventory acts as Buffer for new Strategy Deployment in Second Half of 2014

In order to respond to the US-China anti-dumping and countervailing investigation, many Chinese manufacturers increased shipment proportion to the US in 1H14. Trina Solar was the most aggressive one, with shipments to the US representing more than 60% in 2Q. “Chinese modules shipped to the US increased month by month from January to May, 2014 and it did not begin to decrease until June. The total export to the US exceeded 2.3GW in 1H14.

If taking into consideration the cumulated module capacity of US manufacturers, such as First Solar, SunPower, and REC– near 4GW, US will have enough modules to achieve its target installation of 6GW. Therefore, no matter what the US-China anti-dumping preliminary verdict turns out to be in July 24th, it will not have actual impacts on Chinese and Taiwanese manufacturers until next year. Before the result is announced, manufacturers in China and Taiwan can look for strategies to cope with US’ decision, manufacturers in Japan and Korea can also find bigger opportunities,” added Lin.

Cell Prices Instantly Dropped to the Bottom, Which led to Market Stagnation Before the Announcement of the Anti-Dumping Preliminary Verdict

Many cell manufacturers’ sales revenue reached new records in 2Q because Chinese manufacturers rushed their shipments to the US ahead of time. “50% of the exported cells (4GW) in 1H14 were shipped to China, thus about half of Taiwanese cell manufacturers’ capacities were left unused as China temporarily stopped shipping to the US. Spot and OEM prices not only kept dropping, but also hit the bottom by the end of July.

While a fixed amount of shipment is maintained through European/Japanese orders and low-cost orders, major manufacturers’ utilization rates decreased more than 30%. Among all, shipments for those that rely heavily on Chinese orders may drop 50%. On the other hand, although the US-China trade war will not have actual impacts on Chinese and Taiwanese makers until next year, the stock up caused by weak demand may lead to low prices in short runs,” Lin pointed out further.
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November 20 2018 6:51 pm V11.9.5-2