Dismal outlook for solar power industry: research

Trendforce stated that prices may continue to drop despite the declining market in the industry. The institute added that throughout 2012, the market has repeatedly seen new lows in prices due to rampant oversupply and companies slashing prices in hopes of liquidating excess inventory.

Throughout last year, polysilicon prices dropped as much as 40.8 percent, while silicon chips, batteries and modules fell by 25 to 30 percent, according to Trendforce. Downstream suppliers in the industry were affected to a lesser degree, as they enjoyed a brief respite from the declining trend in the third quarter. However, prices resumed their downward movement as demand in European markets waned, perpetuating an overall decline for the industry, said the Trendforce.

Trendforce stated that from their observation of market conditions, the bottom has emerged for the time being. The company stated that manufacturers have decreased output, while prices are beginning to stabilize. Some manufacturers have indicated that “there is no longer room for further price drops.” It also added that as fabrication processes and production efficiency improve companies should have a chance at turning a profit.

The most critical factor will be the current situation of oversupply, as many solar power system operators are reluctant to relinquish their projected rates of return on investment, further impeding chances of a price rebound in the industry, it said.

Trendforce concluded that as competition heats up among international trade blocs, there is a chance that demand may outstrip supply, providing support for higher prices. It is likely, however, that more manufacturers will follow suit, once again causing oversupply.

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