Inventory draws slightly rebound with marked MoM increase in India, Brazil

China exported 17.7 GW of modules in November, a 7.6% increase from October’s 16.5 GW and a 65% year-on-year increase. From January to November, cumulative exports reached 191.8 GW, a 33% year-on-year increase, surpassing the total shipments of 154.8 GW throughout 2022.


 

Europe

In November, China exported about 4.9 GW of modules to Europe, a 22% decrease from October’s 6.1 GW and a 20% year-on-year decrease. From January to November, Europe imported 96.4 GW of modules, 19.5% more than the same period last year.

Inventory draws for Chinese modules decrease monthly after August as Europe enters the traditional low season in the fourth quarter, largely due to inventory accumulation resulting from substantial draws in 1H23. Inventory draws in November align with earlier expectations but is still much lower than1H23, possibly showing a decline compared to 2H22.

By mid-December, spot module prices in Europe came in at USD 0.1-0.2/W, a slight drop from USD 0.12-0.21/W in mid-November. However, the average price remained at USD 0.13/W, indicating slower price declines. With developers suspending construction for the Christmas holiday, inventory draws have become less since October.

Nevertheless, some European manufacturers are dedicated to addressing module inventory issues by redirecting modules to other countries for consumption. Efficient inventory depletion will allow sustained inventory draws in the fourth quarter. Furthermore, some orders are adjusted to TOPCon products for early 2024. Before that, inventory draws will continue.

Overall, Europe gradually stops drawing inventory as the year ends. Inventory draws in December will be reasonably less than in November. The import volume of Chinese modules in the fourth quarter of this year may be slightly lower than last year.

Asia-Pacific

The Asia-Pacific market imported approximately 8.1 GW of modules from China in November, a significant increase from October's 5.9 GW by 38% and a 300% year-on-year increase. From January to November, the region imported 47.4 GW of Chinese modules, a 61% year-on-year increase.

The import of Chinese modules increased in India, Pakistan, and Japan. India saw the most significant rise, importing nearly 3.9 GW of Chinese modules in November, a 77% month-on-month increase, surpassing the 2.2 GW record set in October and the total import volume of 3.5 GW from January to August. In the meantime, India imported 1.2 GW of cells from China and became the biggest importer of the month. The recent surge in India's solar demand can be attributed to the rapid increase in utility-scale tenders and ground-mounted projects, as well as the end of the ALMM exemption in March 2024. Additionally, there may be sustained inventory draws during the end of 2023 and early 2024 due to the end of the fiscal year.

Recently, prices for Chinese modules have dropped. Indian developers buy the dip for 2024 projects, sending inventory draws in the fourth quarter to twice the volume in the third quarter. With the continuous decline in Chinese module prices, India’s inventory draws will slightly pick up during December and early next year.
 

Americas

In November, the Americas imported 3.1 GW of modules from China, a 28% month-on-month increase from October’s 2.4 GW and a 78% year-on-year increase. From January to November, cumulative imports of Chinese modules reached 27.5 GW, an approximately 18.5% growth compared to the same period last year.

Brazil was the major contributor to the month-on-month increase in November, importing 2.2 GW of Chinese modules, a 24% month-on-month increase, accounting for 73% of the region’s total import volume of the month. The growth of Brazil is attributed to Law 14.300. Coming into force in January 2023, Law 14.300 mandates projects to complete installation within 120 days to a year after application approval, depending on their scale. The policy prompted many developers to draw more from the inventory before year-end. Additionally, recent declines in module prices stimulated demand from centralized generation projects. December's import volume might see a slight increase.

Brazil's Executive Management Committee (Gecex) announced on December 12 the imposition of a 10.8% import tariff on module imports from 2024 onwards. The announcement may lead to a surge in inventory draws in the fourth quarter. The Gecex established the duty-free tariff rate quota. For modules, the quota is USD 1.13 billion (around 10.27 GW), which, compared to the 9.14-GW inventory draws in the first half of this year, suggests sustained inventory draws in the first half of 2024.
 

Middle East and Africa

The Middle East imported 1.2 GW of modules from China in November, a 22% month-on-month decrease from October’s 1.5 GW but a 90% year-on-year increase. From January to November, imports of Chinese modules reached 13 GW, a 71% year-on-year increase, surpassing last year's inventory draws of 8.4 GW.

Saudi Arabia posted the most inventory draws in the Middle East, importing 492 MW of modules from China in November, representing 43% of the region's demand, with the UAE following behind with an import volume of 146 MW. However, compared to October's 919 MW, there is a 46% month-on-month decrease.

Saudi Arabia has launched multiple utility-scale centralized generation projects to attain the 2030 goals outlined in "Saudi Vision 2030" for a cumulative installation of 40 GW. The country has begun construction of projects in the fourth round, with a total capacity of 1.5 GW, and launched the fifth round of tenders, with a total capacity of 3.7 GW in November. All boosted inventory draws this year. Saudi Arabia imported 6.6 GW of Chinese modules during January and November. Some Chinese manufacturers formed strategic collaborations with the Saudi government and local developers, reaching multiple projects cooperation. Therefore, constant, long-term growth is likely in Saudi Arabia.

The African market imported 513 MW of modules in November, a 14% month-on-month decrease but a 76% increase compared to the same period last year. From January to November, Africa imported 7.5 GW of module imports from China, doubling last year's 3.4 GW. South Africa, the largest importer of Chinese modules in Africa, imported 132 MW in November, marking the first rebound since a continuous decline from May and a 36% increase compared to October's 97 MW. As of November, South Africa’s inventory draws reached 4 GW. Whether the momentum will be sustained in December hinges on the improvement of infrastructure and clean energy purchasing progress. However, inventory draws in the fourth quarter may be lower than in the third. South Africa imported 3.1 GW of Chinese modules thanks to incentive policies and reforms. Inventory draws in the second half of 2023 will notably lower than in the first.

After the slight rebound in November, Brazil and India will witness the most increase in inventory draws in December. Meanwhile, module prices will remain low, potentially boosting demand in the two markets. Europe, on the other hand, will see a slight month-on-month decrease in December as it enters the low season.

The Red Sea crisis recently triggered by Yemen’s Houthi militants sent international freight rates to soar three times higher. Although the crisis was averted, it affected the shipping costs of the PV industry. Overall, global inventory draws in December will remain at November’s level if not decrease marginally. The export volume of Chinese modules in the fourth quarter may remain on par with the third.

In the first quarter of 2024, the Lunar New Year holiday in China and the imposition of the 10.8% import tariff in Brazil may cause inventory draws to diminish. Only India and Japan will likely maintain a certain level of inventory draws, thanks to the end of the fiscal year. In Europe, signs of restocking suggest a sustained momentum amid the winter low season. On the supply front, the U.S. and India are expected to commission local production capacities in the first half of 2024, affecting China's module exports. Inventory draws will be limited in the first quarter of the year unless there are significant policy incentives.