Chinese module prices on the rise

23 July 2013

Chinese panels are increasing in price due to the EU's anti-dumping tariffs. As a result, high-quality modules from South Korean and Western suppliers are becoming more competitive, says IHS.

The European Union's anti-dumping tariffs are driving up prices for Chinese solar modules, marking the end of a fast growth period made possible by inexpensive photovoltaic products.

Average pricing for Chinese crystal polysilicon modules in Europe rose by 4% in June to €0.54, up from €0.52 in May, according to the new report by research group IHS, "PV Price Tracker – Modules." The increase follows a steady price decline since the first quarter of 2009 (aside from a seasonal uptick in February 2013).

"With the plan to reduce government subsidies in Germany starting in April 2012, low-cost PV modules from China took over as the engine of growth in the European solar market, enabling the continued expansion of installations," said Henning Wicht, IHS' senior director of solar research.

Wicht adds that the end of the era of low-cost Chinese modules "is likely to cause many companies engaged in the engineering, procurement and construction of solar systems to go out of business this year."

The EU Commission imposed tariffs on June 5 of 11.8%, which correspond to a net value of €0.05 to €0.055 per watt. "The additional cost has translated directly into an increase in prices for buyers," the report adds.

IHS notes that prices are now rising due partly to the closing of a loophole that allowed them to bypass the tariff. Some Chinese suppliers in May and early June used Croatia's transition from a non-EU to an EU member state, declaring modules shipped to Croatia before July 1 as duty-cleared goods. The circumvention, however, is no longer available.

A final agreement on the future trade of solar modules remains the deciding factor that will determine module pricing in Europe in the third quarter, according to IHS’ analysis. As of July 15, it was still not clear whether the EU and China could come to an agreement before the Aug. 5 deadline.

As a result, average tariffs on imported Chinese solar modules could rise on average by 47.6% between Aug. 5 and Dec. 31.

"If the 47.6% tariff goes into effect, global supply lines and pricing for solar modules will be shaken up dramatically," said Glenn Gu, senior PV analyst at IHS. "Chinese suppliers initially will suspend almost all shipments to Europe. In order to continue serving the European market, they then will try to shift production capacity to locations outside of China by using overseas branches or via agreements with non-Chinese module makers. But even if they succeed in this, the supply disruption is likely to cause module prices to increase by 12 to 20% during the following months."

IHS expects high-end pricing for modules that have already cleared European customs to amount to €0.60 to €0.65 per watt. These are modules that would normally be subjected to the 11.8% duty but came through duty free due to their clearance before June 6.

"Such a level of pricing makes high-quality modules from South Korean and Western suppliers more competitive with Chinese-made products," says IHS. "Because of this, European module buyers are likely to switch to these alternative sources."

On the global scale, the price increase in Europe has been compensated by declining prices in Japan. "Chinese modules sold to Japan dropped below $0.70 per watt on average in June 2013, the first time in history they have been at such low levels," Gu noted. "Chinese suppliers are competing furiously and driving prices down in Japan, despite restrictive regulations on imports and quality."