Chinese Solar Module Exports Show Record Growth During Q1 2013

Includes: CSIQ, JKS, SOL, TSL
by: Robert Dydo


The data used in the context of this article has been provided by Solarzoom PV Solar Portal, a Chinese market research firm specializing in the domestic solar industry. In one report, deliveries are measured in megawatts (MW), and destination or port of delivery is disclosed. The second report, also available from Solarzoom, in addition to data from the first report, provides pricing per watt based on the declaration at the Chinese customs office. Due to the confidential nature of this information, those details have been omitted. This information is available in monthly premium reports at SolarPVInvestor.

In order to understand the premise of this article, a couple of definitions are required.

Delivery/export - this term describes a condition in which solar modules would clear Chinese customs with the purpose of exportation. This way, a record will be created that discloses the destination and quantity being cleared, measured in MW. The value of a shipment in US$ is an amount declared by a shipper/exporter, which serves as the basis for computation of duties and taxes. It usually reflects the selling or the replacement value of the goods clearing customs.

Shipment - this is the amount of modules recognized by a company for the purpose of revenue, measured in MW, example: "Renesola Q4 2012 Results. "

In most cases, average selling price per watt (ASP), measured in US$, is published by a company, example: "JinkoSolar Holding's CEO Discusses Q4 2012 Results - Earnings Call Transcript." Otherwise calculation using revenue and number of shipped modules is required.

General Delivery Results

During the first quarter of 2013, the 32 largest Chinese exporters of solar modules delivered a record 4.3GW, which is a 47% increase from the 2.9GW delivered during the fourth quarter of 2012.

Volumes delivered during the quarter to the European continent went from 1.4GW in Q4 to 1.9GW, an increase of 21.97%. However, Europe accounted for only 46% of delivered volume during Q1, versus 51% of deliveries in Q4. This drop coincided with the fear of retroactive levies and was a consequence of the mandatory registration of solar product entering the EU in the early part of March.

Other international locations have compensated generously for the shrinking European market. Some of the most dramatic quarter-over-quarter increases were seen in: South Africa with 604%, India at 241%, Japan with 71% and the U.S. at 41%.

Most Chinese companies listed in the U.S. were also among the top exporters. As a whole, the entire U.S.-listed peer group had an excellent finish and outpaced most forecasts, reaching a quarter-over-quarter growth of 66%.

Experiencing a particularly impressive upturn were four contenders expected to meet profitability in the second half of the year. Solar module exports for ReneSola (NYSE:SOL) and Canadian Solar (NASDAQ:CSIQ) have increased by double digits, while Trina Solar (NYSE:TSL) and JinkoSolar (NYSE:JKS) experienced a triple-digit surge.

Large volumes of global deliveries can have a greater impact, since they carry higher average selling prices (ASP) than those obtained domestically. Although due to many variables we would not consider export deliveries to match shipments, we can still use actual shipment results from Q4 to map it against delivery volumes and use this ratio to evaluate Q1 outcome.


Actual shipments in the fourth quarter were 320MW. Export data for the period showed deliveries equal to 70% of actual volume. The guidance for Q1 stands within the range of 280 to 300MW. Global exports during Q1 are firmly within the mark of this figure, which could indicate a blowout quarter. In case of shrinking domestic revenue, ASP could also see an upswing. In the last six months, ReneSola has become a leader in deliveries to Greece and took a firm second place in Australia. ReneSola is the only Chinese company that officially announced outsourcing arrangements in the EU. Q1 results will be announced on May 16, 2013.

Trina Solar

The company reported actual shipments of 415MW for Q4. In comparison to this figure, worldwide deliveries were only 36%. Since Trina holds inventories in Holland, this made the relation more complicated. Fortunately, the company informed investors that revenue from China in Q4 was around 32%. After modelling Chinese prices, we were able to estimate 160MW sold domestically. Thus, the amount sold globally was assessed at 61%, suggesting that 25% came from warehouses in Europe.

Q1 guidance for Trina Solar indicates 420 to 430MW. If we use 36% of deliveries established from the Q4 model, we would arrive at 151MW to be delivered during Q1. However, export data shows a multiple of this amount. Even if we used 61%, deliveries are significantly larger.

Approximately 64% of Trina deliveries during Q1 went to Europe, particularly ports of Holland and the United Kingdom, where Trina has the most deliveries out of all Chinese companies. On the other hand, Europe is not the only major destination for the company. Trina is the leader among the Chinese in Australia, and is in third place in deliveries to the U.S.

Canadian Solar

Canadian Solar recently pre-announced its results. The shipment volume has been increased to the range of 335 to 345MW. There was an increase in gross margin to the 9 to 10% range. Canadian's actual shipments during Q4 were at 404MW, and deliveries were at 60% of this volume. Delivery during Q1 shows proficiency in covering shipments announced in preliminary figures. In addition, Canadian has a 330MW-capacity-per-year facility in Canada, but this is not included in exports from Mainland China. Since the company topped its guidance, the remaining questions are about the size of the revenue. A clue can be found in the geographic distribution. In Q1, 25% of the company's deliveries went to Japan (20% in Q4), 20% to India (5% in Q4) and another 20% to the U.S. (13% in Q4). Both Japan and the U.S. have higher average selling prices, so overall expectation is that revenue will increase accordingly. In addition, 28% of the total amount was delivered to European destinations, which also experienced recent price increases due to shortages of modules. Those were caused by poor logistics of the registration process and reduction in delivery volume by tier-2 companies.


Jinko was heavily engaged in the Chinese market during Q4 2012. With worldwide (including China) shipments of 250MW of modules, the company attributed a large percentage of this volume to domestic sales. Therefore, it is understandable that global deliveries during the period were low, at 25% of the actual quantity shipped.

Guidance given for Q1 indicated 270 to 300MW. Data shows that overall deliveries made by Jinko in Q1 were within the vicinity of the lower end of offered guidance, with the largest destination, the EU, at 50% of the total. This is in contrast to 83% of volume sent to Europe in Q4. During Q1, Jinko also maintained a good presence in India and dominance in Thailand, delivering over 10% of the total volume to this country.


Despite the fact that the risk of the EU tariffs is real and can inflict injuries on Chinese companies, there is conjecture that leading enterprises will execute their contingency plans when the EU acts. The shift to emerging markets and robust results during the first quarter, despite being a quarter of slowdown, is a sign that Chinese companies are on the offensive.

Even though many reject Chinese solar companies for their past performance, fewer investors these days dismiss the solar industry, particularly in light of strong results from First Solar (NASDAQ:FSLR) and now SunPower (NASDAQ:SPWR). It is only a matter of time for the Chinese companies, particularly those mentioned here, to return to profitability. In contrast to American companies, their market value remains depressed and offers long-term opportunity to those who can see a bit farther ahead.

Disclosure: I am long TSL, CSIQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Problem with this article? Please tell us. Disagree with this article? .