China solar giants chasing growth plans

By BLOOMBERG

BEIJING • The top solar manufacturers in China are boosting production capacity, betting higher output will help them seize a bigger chunk of the global market that is set for its firstever annual contraction.

JinkoSolar Holding Co Ltd, which has lost almost half its market value this year, is ramping up cell and panel capacity and targeting higher-quality production, Qian Jing, VP of the world’s largest panel maker, said in an email. GCL-Poly Energy Holdings Ltd, Tongwei Co Ltd and LONGi Green Energy Technology Co Ltd, which have all plunged at least 45% over the same period, also announced expansion plans.

The push for growth comes even as global solar prices have tanked after China cut domestic subsidies to rein in record growth in 2017 and integrate existing capacity into the grid. Since the release of its “531 Policy”, named after the date of the plan, Goldman Sachs Group Inc and others cut estimates for solar capacity additions in China, the world’s largest market, and Bloomberg New Energy Finance (BNEF) forecast that panel prices may slump 34% this year.

“As long as these producers are able to get financing, they should keep expanding,” said Han Qiming, a Shanghai-based analyst at SWS Research Co. “That will give them a chance to grab more market share and achieve greater scale of operations.”

JinkoSolar will raise cell capacity by 40%, and panels by 20%, by the end of this year from levels seen in the second quarter, according to a results presentation in August.

Tongwei will more than triple its polysilicon capacity by year-end and double cell capacity. GCL-Poly plans to raise polysilicon capacity at its new Xinjiang plant to 50,000 tonnes from a proposed 40,000 tonnes, while LONGi seeks to triple its annual wafer capacity to 45GW by 2020.

While the fallout from China’s clampdown has hurt manufacturers from Asia to Europe, there are good reasons not to cut back. Raising output will allow them to pare unit costs and boost sales while less efficient suppliers get squeezed, according to BNEF analyst Jiang Yali. This could help them to weather the slump of more than 20% in panel and polysilicon prices since China’s plan was announced, BNEF data showed.

The outlook for demand for China producers is also getting sliver of hope as the European Union (EU) this month ended anti-dumping measures on the country’s photovoltaic products, which were in place since 2013.

The EU said the decision was made after considering the needs of producers and those importing solar panels, as well as the bloc’s renewable energy targets.

Overcapacity in China’s solar industry is likely to remain in the near term and any additional EU demand may be only incremental for the country’s photovoltaic manufacturers, Daiwa Capital Markets Hong Kong Ltd analyst Dennis Ip said in a note. He maintained a bearish estimate on China’s solar power capacity installations, forecasting 35GW will be added this year, a 34% decline from 2017.