When will the stock price of China solar panel makers stop collapsing? When China starts switching to solar power. In other words, unless there are bottom feeders in the market with a long-term bullish outlook on the sector, 2012 promises to be a killer for China solar.
Yet, despite U.S. government’s anti-dumping charge against them on Friday, industry insiders said at a conference in Shanghai that they were hopeful for a rebound.
On Friday, the U.S. Commerce Department announced it would start charging 31% higher import duties on China made solar panels and equipment after a finding that Chinese solar panel makers were selling goods in the U.S. below market prices. If approved, the tariffs are expected to have a significant effect on the industry, which exports nearly $2 billion worth of solar panels to the U.S.
Immediately following the announcement, Shen Danyang, spokesman for the Ministry of Commerce in Beijing, said the U.S. was being protectionist.
“(Washington is) deliberately provoking trade friction in the clean energy sector, and…sending the world a negative signal about trade protectionism,” Shen said in a statement.
Shares of China’s biggest solar makers have suffered a crushing defeat in the markets with JA Solar (JASO) wiping out 15% of its share price on Friday. The stock is now at the risk of being delisted, trading at just $0.89 a share. It’s down 33.5% year to date, but down even more — 84% — over the last year.
The European debt crisis hasn’t helped either. Nearly all of China’s solar market depends on solar subsidies in Europe. When countries like Italy opted to cancel those solar subsidy programs last year to save money, China solar stocks took it on the chin.
Suntech Power Holdings (STP) is down 74% over the last 12 months as investors holding these stocks will have to rethink profit margins now that President Obama has ordered the tariff hikes.
So when will this sector turn around?
“I believe the market will revive in 12 to 18 months,” Brian Lau, director of DEK Solar, said at the Sixth SNEC PV Power Expo, held in Shanghai from Wednesday to Friday.
The China Daily noted that in addition to the new tariff and European subsidy cuts, oversupply of polysilicon, a key component in manufacturing solar panels, has depressed the price of solar cells. Lau told conference attendees that the current surplus is driving solar prices down. That’s adding to the already dismal outlook for the sector. But that’s short term.
As prices become lower, there will be more customers.
“After all, the industry cannot always rely on subsidies,” Lau said. “Currently, more output is not what they want, what they want is a cost-effective, and accurate production line,” he said, noting the new platform will save space by 50%, and also largely reduce energy consumption, while improving the battery conversion rate,China Daily reported from Shanghai.
More than 90% of solar panel products made in China are bound for export. Industry insiders are hoping that as China gets serious about green technologies, from solar power to lithium batteries that power electric cars, Beijing will mandate its own use of solar energy in the near future, priming the pump for an industry that’s grown too dependent on the wrong countries.
Now is a great time to buy Chinese solar stocks. There is a huge domestic market that these companies have only just begin to penetrate.
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