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Troubles with the Chinese economy might prove good news for China’s solar manufacturing giants, even though one of the largest is struggling to survive.
Mark Barineau, solar business intelligence analyst at Lux Research, told Solarplaza that the issues faced by Yingli Green Energy Holding “are unique” and that strong national and global demand for PV would continue to bolster the fortunes of major manufacturers.
Yingli, formerly the world’s biggest solar panel maker, this month cut its 2015 sales forecast by 22%, from 3.6 GW to at most 2.8 GW, with an expected second-quarter net loss of USD$94 million, more than twice that of the same period in 2014.
News of the quarterly loss, the sixteenth in a row for the panel maker, sent Yingli’s US shares tumbling to an all-time low of USD$0.55. It also drew comparisons between Yingli and another once-great Chinese panel maker, Suntech, which went bankrupt in 2013.
Meanwhile, some observers voiced concerns that China’s faltering economy, which has suffered from a falling export market over the last two months, could hurt other Chinese PV manufacturing giants if mandarins pull the plug on renewable energy support.
There is no doubt that some solar stocks have been hit by the prospect of a slowdown in the Chinese solar market
There is no doubt that some solar stocks have been hit by the prospect of a slowdown in the Chinese solar market, the world’s largest. JinkoSolar Holding and Trina Solar Limited shares have lost around a third of their value since June.
However, it might not all be bad news for China’s PV behemoths. Forbes reported that Jinko and Trina have actually raised their sales forecasts, by 20% and 11% respectively, on the back of strong national demand.
There is speculation that rising orders are the result of a rush to snap up solar incentives before they disappear.
Companies have increased shipments. With the government likely to reduce subsidies in future, we see a push to establish as many installations as possible.
“Companies have increased shipments,” Barineau confirmed. “With the government likely to reduce subsidies in future, we see a push to establish as many installations as possible.”
Longer term, furthermore, “the demand is likely to continue as China has one of the worst pollution challenges in the world,” Barineau said.
At the same time, the devaluation of the yuan could favour solar exports by making Chinese panels even more competitive.
In Europe, solar panel makers have already taken steps to ward off cut-price Chinese imports by demanding an extension to import duties due to expire this December.
“China has no market price for solar panels, but government-controlled prices, which are still for the most part under full production costs,” said lobby group EU ProSun. “The resulting deficits of Chinese manufacturers are continuously offset by retroactive government grants.”
Against this background, it seems unlikely Yingli’s misfortunes could be evidence of a wider Chinese solar problem. Back in June the company’s bosses tried to calm investor fears with talk of land sales to meet debt repayments.
With a worsening outlook three months on, said Barineau: “Long-term there are still questions about the viability of their company.”