Europe remains the primary hub for inverter demand, playing a pivotal role in shaping the profitability landscape for inverter enterprises. During the period spanning January to July, China’s inverter exports totaled a sum of 47.8 billion yuan, with a substantial 29.5 billion yuan directed towards European markets. This constitutes a significant 62% share of China’s total inverter export value. Evidently, the demand dynamics within Europe wield a significant influence over the performance of China’s inverter exports. Given that the sale of inverters to the European market tends to yield heightened profitability, the fortunes of domestic inverter enterprises are intricately intertwined with the ebbs and flows of European demand.
During July, European demand exhibited a lackluster performance, but indications point toward a turnaround with positive export figures projected for August. The export value to Europe for July amounted to 3.171 billion yuan, marking a 3.22% year-on-year decrease and a substantial 17.89% decline when compared to the previous month. Notably, July emerged as the weakest performing month for exports in 2023, and over a span of 13 months, stretching from July 2022 to July 2023.
Several potential factors contribute to this scenario. Firstly, the lingering inventory issue within Europe has yet to see substantial relief, requiring more time for inventory consumption. Insights can be gleaned from the second-quarter performance reports of Enphase, Solaredge, and SMA. Secondly, the European summer vacation period, spanning from July to September, could be influencing the demand patterns. As the summer season commences in July, the demand that would typically manifest in this month might have shifted earlier to June or might potentially be postponed to August. This trend is supported by the export data from Germany in 2021 and 2022, which revealed that demand in June and August surpassed that of July. This pattern holds true for the broader European region as well. Therefore, an anticipated data recovery is foreseen for August.
Thirdly, the Russian-Ukrainian conflict of 2022 induced an energy crisis that catalyzed a surge in European inverter demand during the latter half of that year. For instance, the third quarter of 2022 witnessed an inverter demand amounting to 10.9 billion yuan, marking a staggering 195% surge in comparison to the demand registered in the first quarter of the same year. This stands in stark contrast to 2021, where third-quarter demand was only 51% higher than that of the first quarter. However, the influence of the energy crisis in 2023 has waned; the continued high volume of imports into Europe actually underscores the enduring nature of European demand, rather than indicating a sharp decline.
The final factor pertains to pricing dynamics. Projections indicate that the full-year export volume of European inverters in 2023 will reach 50.5 billion yuan, representing a robust 48% year-on-year increase. Assuming that the export volume to Europe remains consistent with that of the same period in 2022 from August to December, this implies a flat year-on-year growth rate over the subsequent five months. Consequently, it is anticipated that the total European export value for 2023 will amount to around 50.5 billion yuan (29.47 billion yuan from January to July, and an assumed 21.07 billion yuan from August to December). In comparison, 2022 saw an export value of 34.2 billion yuan, signifying a notable year-on-year increase of 48% for 2023.