According to the latest quarterly report from IMS Research, suppliers of the photovoltaic industry have already lowered their prices by 15% in the past six weeks to seize the share in the oversupply market. In the first quarter of 2011, the average price of crystalline silicon photovoltaic modules is still close to 1.80 US dollars / watt. However, the sharp downturn in market dynamics led to a sharp drop in prices, and the same components now have prices below $1.40 per watt.
The rapid decline in the prices of batteries and wafers will help offset the losses caused by falling PV module prices and ease the impact on suppliers’ profits. However, although the polysilicon spot price has fallen by more than 30% since the end of 2010, the contract price has remained relatively stable, and therefore the average price has declined much more slowly. The average price of polysilicon has been firm at more than 50 US dollars/kg, which limits the ability of downstream suppliers to reduce costs.
Sam Wilkinson, Senior Market Analyst at IMS Research, said: “The vertically integrated Chinese first-tier crystalline silicon PV module suppliers have the most competitive cost structure, and their gross margins were as high as 20% in 2010. Profits were third in 2010. The quarter reached its highest peak, and since then it has started to decline.The current price level has exerted tremendous pressure on the profits of these suppliers. We believe that by the third quarter of 2011, their average gross profit margin will drop below 20%, and 2 The profits of the suppliers will be even lower."
In 2010, the total gross profit margin of global PV module suppliers was approximately US$2.5 billion per quarter, and this number is expected to decline by 40% in the first quarter and second quarter of 2011 due to lower profit margins and reduced shipments. Demand is expected to pick up again in the second half of 2011, which will help suppliers restore profits. IMS Research expects that the total gross profit margin of PV module suppliers will increase again in the third quarter and fourth quarter of 2011.
The rapid decline in the prices of batteries and wafers will help offset the losses caused by falling PV module prices and ease the impact on suppliers’ profits. However, although the polysilicon spot price has fallen by more than 30% since the end of 2010, the contract price has remained relatively stable, and therefore the average price has declined much more slowly. The average price of polysilicon has been firm at more than 50 US dollars/kg, which limits the ability of downstream suppliers to reduce costs.
Global PV module gross margin
Sam Wilkinson, Senior Market Analyst at IMS Research, said: “The vertically integrated Chinese first-tier crystalline silicon PV module suppliers have the most competitive cost structure, and their gross margins were as high as 20% in 2010. Profits were third in 2010. The quarter reached its highest peak, and since then it has started to decline.The current price level has exerted tremendous pressure on the profits of these suppliers. We believe that by the third quarter of 2011, their average gross profit margin will drop below 20%, and 2 The profits of the suppliers will be even lower."
In 2010, the total gross profit margin of global PV module suppliers was approximately US$2.5 billion per quarter, and this number is expected to decline by 40% in the first quarter and second quarter of 2011 due to lower profit margins and reduced shipments. Demand is expected to pick up again in the second half of 2011, which will help suppliers restore profits. IMS Research expects that the total gross profit margin of PV module suppliers will increase again in the third quarter and fourth quarter of 2011.
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