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Why are prices rising?

Sheng Zhang 0

Solar products have become more expensive, which many solar manufacturers and dealers have already felt since the beginning of 2021. We already predicted this price development on our website at the end of 2020 and many of our customers have benefited from it and saved a lot of money with our Christmas campaign.

As we regularly exchange information with manufacturers in China and import goods, we have seen the trend earlier and earlier and can see the prices for the near future.

The prices of solar modules reached a historic low in June/July 2020, due to the VAT reduction in July, many dealers sold very little in May/June and were under great pressure at that time. In July, VAT went up to 16%, customers stormed into the shops and bought all the goods. But manufacturers and traders were not happy for long. Because of the pandemic, the world was running anything but normally. China beat the pandemic first and has been producing at a normal pace again since April/May 2020. The rest of the world, however, had stopped production. The ships bring containers from China to all corners of the world with Chinese products, but could not bring any containers back to China. The shipping company is extremely reluctant to ship the empty containers to China. From July 2020 onwards, the price of containers will rise steeply. Within 6 months, the price of shipping a 40-foot container has risen from €1000.00 to a maximum of €15,000.00. Some wonder why the price has risen so much, we can’t understand it either. Partly, of course, it is the high costs, but partly it is also due to greed on the part of the shipping company. Despite high shipping costs, it is very difficult to book a ship. Even if the goods are on the water, it takes much longer than usual for them to reach the port.

Inverter and storage manufacturers (both belong together as almost all inverter manufacturers also offer their own storage solution) have the same problem as with solar modules with the extremely increased sea transport costs. The pandemic has made many smart products big sellers. The Bitcoin hype has had a phenomenal impact internationally. Smart cars, smart buildings, countless IoT products are booming. All these products are based on micro computer chips. Unfortunately, the chip shortage has also affected inverter manufacturers. Solar inverters tend to be on the back burner for chip manufacturers as these products are already very cheap and not as profitable as most other products. We have already experienced price increases from major inverter manufacturers, Goodwe and Growatt have already officially announced a price increase of 10-20%. Price is unfortunately only one problem with the inverter, but the biggest problem is delivery time. Even if you are willing to put more money on the table, you simply don’t get any inverters at the moment. Many products are already sold out, and supplies will not arrive for another 2 or 3 months. Not only Chinese inverters are affected, German and European inverters are also hard to get, because inverters that are manufactured in Europe are also waiting in vain for component deliveries from China.

In September, a large ship made headlines, the Ever Given, which blocked the Suez Canal. The canal is unblocked again after two weeks. But the impact only becomes apparent later. Many goods on the ship are confiscated by the Egyptian government. You never know when they will be released again. Due to capacity problems, manufacturers cannot simply deliver so many goods, because there are simply no goods. It is not like toilet paper that many countries are in stock to produce. Solar modules, for example, come almost exclusively from China. In Europe, many countries have long holidays and the ships wait in a very long queue in front of the port. The port lacks the staff to handle so many ships and goods at once.

Corona continues to be a reason for the poor availability. Many shipping companies have reported that there is a shortage of healthy seafarers at the moment. Most of the seafarers are from India. Massive cancellations have been reported due to the extremely high infection rate in India. Many ships have to be delayed indefinitely because they are not sufficiently manned. Even if you want to pay the high fees now, you often don’t get available ships.

Many countries have printed a lot of money to fight the pandemic and stimulate the economy. In the long run, this also leads to an increase in material and labour costs for manufacturers. Many products will slowly become expensive in the future because there is simply too much money on the market.

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