China Solar Companies Reportedly Slowing Production

November 10, 2008, 1:12 pm

China Solar Companies Reportedly Slowing Production

Posted by Eric Savitz

The China-based solar cell and module manufacturers are slowing down production in anticipation of slowing demand and falling prices, according to Wedge MKI, the Asia-based research arm of investment research boutique Wedge Partners. In a research note this morning, Wedge provided a rundown on the moves some of the companies in the industry are making in response to the rapidly shifting economic conditions, including much tighter credit markets, falling module and polysilicon prices and a sharp appreciation in the dollar. "Companies are doing their best to hold on while pricing falls apart, but market visibility is very poor," Wedge reports.

Here's a rundown on the steps Wedge finds unfolding at some of the key players:

Suntech (STP): "Quietly laying off about 10% of its 10,000 employees, and has idled half its production lines." Wedge says the company is "lobbying regional banks for short-term financial support in order to ballast the company during this downturn." The company has "put on ice" its plans to expand from 700 MW to 1.2 GW by the end of the year. European orders are down, and depreciation of the dollar means ASPs "are untenably low." Prices proposed for new contracts would put solar manufacturers "into a loss position."

JA Solar (JASO): Customer orders are "drastically down." Channel sources say the company has "large volumes of inventory which will ultimately have to be sold at much-reduced prices." Contends that half of the company's production lines have been closed down.

Yingli (YGE): Postponed or canceled planned expansion from 400 MW to 600 MW. Trying unsuccessfully to renegotiate contact with equipment supplier GT Solar (SOLR); seeking to retrieve its down payment.

Trina (TSL): Halted plans to expand its plan to 700 MW, at least through Q1.

Canadian Solar (CSIQ): "Canadian Solar may also have slowed its ingot plant in Luoyang, Henan."

Wedge notes that the spot price of polysilicon in the China market is down to $233, from $280 last week. "Although the lowered input cost should offer relief, we understand that purchasing is very sluggish due to lack of visibility on market demand and also weak financing for pre-payments," Wedge reports.