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Solar Market Report: Module Shipments To Decline 10%

|Includes: FSLR, QCLSF, SPWR, STP, Yingli Green Energy Holding Company Limited (YGE)

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Shipments in the photovoltaic (PV) module industry are forecast to decline 10% quarter-on-quarter in 1Q11, according to a new market report. 

Shipments have been booming for the last year and a half, but IMS Research says that is about to end.

Final numbers for 2Q10 have yet to come in, but expectations are that the quarter will represent the sixth straight increase in industry-wide shipments since 1Q09. 

IMS didn't give a prediction for the second half of 2010, but said the "future is not all bright" for 2011.

The research firm predicts 1Q11 will be very different from 1Q10 when speculation of additional cuts to incentive schemes drove unusually high demand in Europe and prompted extensive production capacity expansions across the globe.

Research Analyst, Sam Wilkinson commented, “We predict the return of classic seasonal installation patterns and forecast that completed installations will decrease by nearly 40% in 1Q11 versus 4Q10."

This fall in demand for installations after 31st December 2010, combined with huge capacity expansions certainly poses some problems for the market. IMS predicts a sharp slowdown in module shipments from Q4’10 and a decline in module prices by 8%.

According to IMS Research, after declining by an average of 10% each quarter in 2009, high demand resulted in relatively small price decreases from 4Q09 to 1Q10. Factory-gate prices of crystalline modules fell just 2% in Euros between the two quarters, despite the German feed-in tariff (NYSE:FIT) reducing by 9 to 11% as planned at the end of the year.

In 2Q10, average crystalline module prices are estimated to have increased by 1% in Euros over the previous quarter. By the end of the year, prices are forecast to fall just 1% from their levels in the final quarter of 2009.

A further decline in prices could mean additional troubles for German's Q-Cells (QCE.DE), which is still working to turnaround from major losses in 2009. 

And it will be interesting to see if major Chinese and U.S. manufactures like Yingli Green Energy(NYSE: YGE), Suntech (Nasdaq: STP), SunPower (Nasdaq: SPWRA) and First Solar (Nasdaq: FSLR) scale back their ambitious expansion goals for manufacturing



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