The firm, which was recently acquired by IHS Inc., said a number of factors contributed to the photovoltaic manufacturing slump in China during the first half of the year. These included stiffening competition in the global market place, vast oversupply and falling prices that put tremendous pressure on manufacturers' balance sheets.
IMS says Chinese PV suppliers have continued to suffer along with the entire global supplier base amid highly competitive market conditions.
Challenging conditions in the first half of 2012 and a bleak outlook in many major markets following incentive revisions and an on-going trade war in the U.S. and Europe have resulted in production stalling, the analyst said.
"Although a small number of manufacturers have been able to maintain reasonable utilization levels, a large number of polysilicon fabs remain closed, meaning that average polysilicon production utilization in China fell below 50 percent in the second quarter of 2012," it added.
Cell production also fell, largely impacted by the United States’ recent decision to impose import tariffs on cells manufactured in China leading to many suppliers increasing the amount of cells they source from Taiwan and other locations outside mainland China.
Prices also continued to fall during the quarter, with module prices falling by a further 7 percent, bringing further bad news for China’s suppliers whose profit margins are already under huge pressure. IMS Research said.
“In an effort to restore confidence amongst its substantial PV supplier base and help meet its phenomenal energy requirements, China has more than doubled its PV installation target to 50 GW by 2020,” said Frank Xie, senior market analyst at IMS Research.
“This highly aggressive target could be achieved given the rate of deployment that China has already managed to achieve in the relatively short amount of time since its national FiT was launched, and provides a clear message that China will strongly support its PV industry in the future,” he added.
According to IMS Research’s latest report, the huge potential of the Chinese PV market is attracting the attention of more than just the domestic supplier base and resulting in a diversifying range of products being sold into the market.
“Large MW-scale turn-key inverter solutions are forecast to increase their share of the Chinese PV market in 2012 driven by their highly competitive upfront cost, and ease of installation and maintenance,” Xie said.
Inverter solutions larger than 1 MW are forecast to double their share of the market over the next 2 years. IMS Research also forecasts that China will follow a similar trend seen in the European PV inverter market and begin to employ an increasing amount of small three-phase inverters in its fast growing rooftop installation.
vIMS Research forecasts that PV installations in China will be a key driver in the growth of the global PV market. Installations are forecast to grow quickly in the second half of 2012 with over 10 GW installed over the next two years.
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