转贴：Solar Industry Braces With Looming Glut Eroding Panel Prices (bloomberg)
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Author:moneySIFU | Publish date: Wed, 24 Aug 2016, 10:43 PM
Solar manufacturers that are ramping up production now face a looming glut of panels, forcing companies to adjust or face dire consequences.
Trina Solar Ltd., Canadian Solar Inc. and JinkoSolar Holding Co. are among the suppliers boosting output at factories that will expand global capacity by 18 percent this year, according to Bloomberg New Energy Finance.
The manufacturers are locked in a race to build bigger and more advanced factories to crank out panels faster and cheaper. Just as they start rolling off the lines, demand is expected to slow, especially in China where the government rolled back subsidies last month. Prices are slumping, and suppliers expect margins to slip as well. It’s a pattern we’ve seen before, after a global oversupply five years ago drove dozens of companies out of business.
“Oversupply appears to be business as usual in the solar industry,” said Jenny Chase, New Energy Finance’s lead solar analyst.
The solar industry went through a similar boom-bust cycle after capacity grew faster than demand, triggering a two-year slump starting in late 2011. The result was a wave of consolidation as prices plunged and panelmakers’ losses piled up. Cheap panels also helped spur demand for more solar power, eventually prompting the survivors to expand production.
More Capacity
“These companies are all fighting for market share and their tendency is to build more and more capacity,” Pavel Molchanov, an analyst at Raymond James Financial Inc., said in an interview. “Ultimately that drives down prices and margins for everyone.”
Canadian Solar, the second-largest manufacturer, is building a a 350-megawatt facility in Brazil, and JinkoSolar is expanding output from a 450-megawatt factory that went into operation in Malaysia last year.
This comes as demand slows in China, the world’s largest market, where the government is reducing subsidies for solar farms commissioned after June 30. That fueled a rush of projects in the first half of the year as developers added as much as 22 gigawatts before the subsidy expired, said Hugh Bromley, a New Energy Finance analyst. With the lower subsidy in place, he expects about 6 to 8 gigawatts of new solar projects in the second half.
Trina, the world’s largest panel maker, said Tuesday that shipments will fall as much as 6.5 percent in the third quarter, to between 1.55 and 1.65 gigawatts. At the same time, the company has increased production capacity 7.1 percent after opening a 500-megawatt factory in Thailand in March. Yingli Green Energy Holding Co. said Tuesday that it expects shipments to slip as much as 54 percent in the current quarter, after 60 percent of its panels went to China in the second quarter.
Chinese Demand
“Chinese solar manufacturers now face tougher competition due to a supply capacity increase and a decrease in market demand,” Yingli Green Energy Vice President and Chief Climate Officer Jingfeng Xiong said during a call Tuesday with analysts.
To be clear, demand for solar is continuing to rise, but that growth is slowing. Global installations this year may reach about 67 gigawatts, up 27 percent from last year, according to New Energy Finance. In 2017, it’s expected to increase by 25 percent, and in 2018 it will rise 23 percent.
It’s hard to pinpoint whether supply has already eclipsed demand since companies won’t report whether their shipments have been impacted by the reduced subsidy in China until the fourth quarter. Evidence is mounting, however, that the glut has already arrived. Panel prices are at a record low of 44.7 cents a watt after plunging 10 percent in the past six weeks. Prices may fall another 15 percent by the end of the year, according to Patrick Jobin, an analyst at Credit Suisse Group AG.
Solar Consolidation
While the last supply glut ravaged the solar industry, it may have less impact this time because the supply chain is more consolidated. The market has fundamentally changed, with 90 percent of sales going to a handful of the biggest companies, compared with 66 percent four years ago, said Xiaoting Wang, a New Energy Finance analyst. Industry leaders like Trina and Canadian Solar have expanded beyond manufacturing, diversifying their revenue by developing solar farms.
While manufacturers may have known they were speeding toward a glut, it’s not easy to take their foot off the gas. Many production costs are fixed, so cutting output would drive down margins and erode their market share.
Collective ‘Suicide’
“They would essentially be giving up the race,” said Chase of New Energy Finance. “And nobody wants to do that –- even though collectively it’s suicide.”
Canadian Solar is one of the few companies that has announced it is scaling back its manufacturing expansion, adding 5.8 gigawatts of capacity this year instead of an initial target of 6.4 gigawatts.
“Canadian Solar’s objective this year is to play safe, not to grow our market share, but to improve our margin structure,” Canadian Solar Chief Executive Officer Shawn Qu said during an Aug. 18 conference call with analysts.
It’s unclear how long a supply glut may last. Wang, of New Energy Finance, said it may take two years to work through surplus capacity.
The key is how the companies react, whether they take a cautious approach or continue the race to build more factories, according to Merry Xu, chief financial officer at Trina.
“It just depends on the strategic approaches of our peers,” Xu said on a call with analysts Tuesday. “We do hope that this imbalance won’t last very long.”
If you know anything about solar markets tou would know that solar tech is a completely different market ! I have no idea why you compare these other companies they are in different countries and have none of the advantages that Tek Seng have ie currency week therefore cheap to buy from overseas , Green incentives from MIDA Malaysian government which allows for refund of expansion costs that they are just completing and then tax incentives on there sales if that is not enough then they have access to the purest silicone supplies in the world which are in Sarawak so are paid for in local currency ! NO IMPORT CURRENCY COSTS !
AGAIN LIKE I SAID DO YOUR RESEARCH AND LOOK AT FUNDERMENTALS INSTEAD OF COMPLAINING. In response to the chinese article above addressing a slow down in Taiwan markets and Chinese market.
It is obvious that you are not aware that these two countries and any Solar companies located in these countries are banned from selling into the North American countries and therefore rely on domestic and European markets only for which they have additional taxes in the European market as there is no free trade aggreement. Tek Seng has no such limitations and is free to trade with all countries including China and Taiwan. Again I do not know why you are comparing Tek Seng with Taiwan and China as they are not Equal !!!!!!! In addition to the above it should be noted that as Great Britain made the wonderful decision to Brixet it will allow Tek Seng to sell to Britain with no European Taxes ! Another advantage for Tek Seng as Malaysia already has a trade agreement with Britain but was subject to tax tarrifs due to Britain being part of the useless EU !
I should know I am British and negotiate the trade agreements.
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