Overseas inventory draw picks up while inventory impacts linger in Europe

According to Chinese customs data, China exported 17.3 GW of modules in August, up 19.2% from 14.5 GW in July and up 20.6% from the same month last year. During January and August, China exported 137.9 GW of modules, an increase of 26.8% year-on-year.


 

Europe

Europe imported 8.2 GW of modules from China in August, a slight rebound of 15% from 7.1 GW in July and a decline of 5.4% from the same month last year. Exports to Europe since January have reached a cumulative total of 77.7 GW, up 29.21% year-on-year.

Following the sharp decline in July, exports to Europe picked up slightly in August, suggesting a cooler market in the third quarter than in the previous two. Despite the short-term impact on demand caused by the summer vacation, the second and third quarters remain the peak season for Europe. It was severe inventory issues that led to a significant drop in demand in the third quarter of this year. The second half of the year will see much weaker demand than the first half.

With the end of the vacation and the construction period before winter comes, the European market will gradually recover at a modest pace between September and October. On the price front, despite the rapid fall since the beginning of the year, price declines in Europe began to narrow in September, with signs of recovery in order delivery.

Given the characteristics of the European market, a certain level of rolling inventory will remain on the market next year, but whether this year's high-inventory issue will persist into next year depends on local consumption. Judging from the installation data released by European countries in the first half of the year, an acceleration in installations will be necessary to deplete the inventory accumulated so far this year.


 

Asia Pacific

Asia Pacific imported 4.4 GW of modules from China in August, up from July while showing a 109% year-on-year increase, bringing the cumulative import volume since January to 26.4 GW.

India was the major source of demand for Chinese modules in August, with demand reaching 959 MW, up 228% month-on-month and the highest since the Basic Customs Duty (BCD) came into effect in April last year. This shows that despite a 40% tariff on module imports, the cost of imported modules, even with multiple tariffs, is still lower than locally manufactured modules as prices are falling rapidly across the global supply chain. In addition, demand recovers with many postponed projects getting off the ground as deadlines approach. With the implementation of the Approved List of Models and Manufacturers (ALMM) and the extension of deadlines for some deferred projects to the first quarter of next year, India’s module demand is likely to rise between the fourth quarter of this year and the first quarter of next year.

Besides India, Uzbekistan has also seen significant demand growth over the past two months, exceeding 600 MW in August, presumably driven by large-scale projects. Other key markets in Asia include Japan and Australia, both of which are well-established PV players.

Module price declines since the mid-2023 boost demand across the region. However, some countries like Australia have not experienced visible demand growth due to economic factors. In Japan, demand has slowed down and even shrunk slightly compared to last year. This indicates that even with falling module prices, demand growth in matured PV markets can be limited by finite developable land and floor area restrictions.
 

Americas                        

The Americas imported 2.7 GW of modules from China in August, up 18% month-on-month and up 10% year-on-year. The cumulative imports since January reached 19.3 GW, up 12.4% year-on-year.

Brazil was the main contributor to the growth this month, with demand increasing by 36% compared to the previous month, despite reduced sales volume in distribution channels and inventory clearance at low prices. Even after the installation rush of distributed generation projects, module demand in Brazil did not show signs of rapid decline. Such momentum can be attributed to lower module prices and shorter payback periods of PV projects. In addition, demand from ground-mounted projects picks up this year, underpinning PV demand in Brazil. There have been recent reports of potential changes in Brazil's tariff exemption for modules, which could lead to volatility in market demand in the near term.
 

Middle East and Africa

The Middle East imported 1.5 GW of modules from China, up 53% month-on-month and up 73% year-on-year, bringing the cumulative imports since January to 8.5 GW, surpassing the annual import volume of last year.

The main sources of demand in the Middle East were Saudi Arabia, the UAE, and Israel, with Saudi Arabia growing rapidly in the fourth quarter of last year, importing a total of 4 GW of Chinese modules during January and August this year, accounting for 46% of Middle Eastern demand. With a number of large-scale ground-mounted projects underway and strong governmental support, Saudi Arabia is expected to sustain steady long-term demand.

Africa imported 479 MW of Chinese modules in August, down 31% month-on-month and up 85% year-on-year. Africa imported 6 GW of modules from China during January and August this year, with 61% of which ending up in South Africa. The country imported 200 MW of Chinese modules in August, down 36% month-on-month, indicating a much weaker demand than in the second quarter.

Demand growth in South Africa this year is driven by the urgent need for energy reform. To address prolonged intermittent power outages, the government offers high subsidies and tax credits, driving demand for distributed generation projects. Still, actual effects hinge on policy continuity and actual installation.

Most overseas markets have shown signs of weakening demand in the second half of the year, attesting to inventory issues that the industry has long been discussing. In the fourth quarter, despite the off-season in some markets, it is still necessary to monitor whether module manufacturers will engage in large-scale shipments to meet year-end targets. InfoLink expects module makers to adopt more cautious shipping strategies and manage inventory more actively after the rapid stockpiling and inventory accumulation earlier this year.