Major Chinese solar panel makers such as Canadian Solar Inc recorded buoyant shipments in the April-June period as they raced to rev up sales ahead of EU restrictions on Chinese exports, but sales have eased in the current quarter.
Canadian Solar said late on Thursday that it expects to ship between 410 megawatts (MW) and 430 MW of solar panels in the third quarter, lower than the 455 MW it shipped in the second but still much higher than first quarter shipment of 340 MW. In the second quarter of 2012, the firm shipped 412 MW.
Rivals Trina Solar Ltd and Yingli Green Energy Holding on Thursday said they expect second-quarter shipments and gross margins to be higher than their forecasts on a jump in sales in Europe.
"Given last month's EU-China trade deal, needless to say the pre-buying has come to an end," Raymond James analyst Pavel Molchanov said, referring to the agreement on regulating Chinese panel imports.
The fine print of the deal has yet to be disclosed, but an EU source told Reuters that Chinese firms could sell into Europe - the world's largest solar market - at a minimum price of 56 euro cents per watt, close to the market price.
Shipments from China, the world's dominant solar panel supplier, will be capped at 7 gigawatt (GW) per year, around half of the EU's 2012 demand of about 15GW.
Anticipating the restrictions, many Chinese panel makers scrambled to sell into Europe in the first half, with exports already reaching 6.5 GW, analysts say. Chinese solar panel sales to the EU reached €21 billion ($27.9 billion) last year.
It remains unclear if any annual EU quota on Chinese panels covers first-half shipments, but analysts expect exports to Europe to ease in the current quarter as the April-June surge has left an inventory build-up of about 2 GW.
Globally, Chinese manufacturers are on track to ship a total of 22-23 GW of solar modules this year. Total estimated global demand is 35 GW, say analysts. Their long-term future would depend on whether they can rapidly diversify away from the European market and tap the so-called emerging solar markets like the US, Japan and China.
Eyes on Japan
Canadian Solar, like its rivals, is trying to make up for the loss of market share in Europe by tapping more lucrative markets such as Japan.
Higher sales to the fast-growing Japanese market helped it halve its second-quarter loss and prompted it to forecast profitability on a full-year basis in 2013.
The company, which has reported losses for the last two years, said its net loss narrowed to $12.6 million, or 29 cents per share, in the quarter ended June from $25.5 million, or 59 cents per share, a year earlier.
It forecast gross margin of 10-12 per cent for the third quarter, lower than nearly 13 per cent in second quarter as its market share shrinks in the EU.
However, its sales to Europe, which accounted for nearly 70 per cent of its revenue a year ago, slumped by about 83 per cent in the quarter ended June, accounting for less than 11 per cent of its second-quarter revenue of $380.4 million.
Japan accounted for almost 36 per cent of Canadian Solar's total solar panel shipments in the second quarter, nearly double that of the first quarter.
Japan, however, will not fully compensate for the loss of market share in Europe, meaning that Canadian Solar will have to sell more in China and other emerging Asian markets, where panel prices are among the lowest in the world.
Shares of Canadian Solar, most of whose manufacturing operations are in China, were down nearly 8 per cent at $13.17 on the Nasdaq on Thursday.
Shares of Yingli Green and Trina Solar shot up on the New York Stock Exchange on Thursday on the companies' stronger-than-expected estimates for the second quarter.
Yingli estimated that its shipments rose 23-24 per cent in the second quarter from the first. It had previously forecast a low-to-mid teen per centage increase.
Trina Solar estimated that it has shipped between 630 MW and 660 MW of solar panels in the quarter ended June, higher than its forecast of 500 MW-530 MW.