PV industry may suffer sluggish demand in 2Q11

[FBaggins]

Emphasis mine -

Affected by the wait-and-see stance among European clients and the concern for high inventory, PV demand began to slacken at the beginning of the second quarter and the pressure of sluggish business seems to begin haunting what is traditionally a busy season. The worst spot is the solar-cell sector, especially in view of its excessive capacity expansion, as evidenced by output reduction and price cut in the sector. But the earthquake in Japan seems to bring some hope for improvement.

Fast capacity expansion among solar-cell manufacturers in Taiwan and China starting from the second half of 2010 has led to concerns of excessive supply. But at the time manufacturers remained unfazed, believing that large orders from major international contract manufacturers would be sufficient to fill the expanded capacities. With contribution also coming from own-branded sales, they were confident of maintaining high capacity utilization rate.

However, buyers began to embrace a wait-and-see attitude, due to uncertainty in Europe's new PV policy. Some major international contract manufacturers abruptly suspended placement of new orders and demanded their subcontractors in Taiwan and China to hold shipment.

The phenomenon spread quickly, triggering a domino effect, prompting solar-cell makers to vie for new orders to fill their capacity or cut down high inventory. For many PV firms, international contract-production orders underline market trend and decline in such orders overshadows their outlook for business in April.

The suspension of shipments requested by major international contract manufacturers has caused solar-cell manufacturers in Taiwan and China, mostly first-tier ones, to suffer major decline in shipmenta, leading to inventory buildup. PV firms noted that those first-tier firms started to scramble for orders by slashing prices, driving down average quotes for solar-cell to US$1.17-1.18 in early April, down 2.5% from US$1.2 in late March.

http://www.digitimes.com/news/a20110418PD208.html

Hmm... maybe that's how they intend to get to grid parity for PV. Just make so much of it that the price collapses.