Wednesday, February 25, 2009

China Suntech says '09 output to rise 60 pct

* Output in 2009 expected to rise 60 pct

* Prices down 20 percent since the third quarter

* May increase capacity in 2009 if financial crisis eases

BEIJING, Feb 17 - China's Suntech Power, the world's largest solar module maker, said on Tuesday it expected production to rise 60 percent this year to at least 800 megawatts, as demand remains strong in Europe.

The company could resurrect a plan suspended earlier this year to expand capacity by 40 percent to 1.4 gigawatts, but will hold off on a decision until the impact from the global financial crisis is more transparent.

Suntech, which makes the panels that turn sunlight into electricity, expects full-year 2008 revenues between $1.91 billion and $1.93 billion.

Shi Zhengrong, the founder and chairman of Suntech Power Holdings Co, said that the financial crisis was affecting his industry, leading to a 20 percent cut in prices since the third quarter of last year.

"We have already signed over 600 megawatts of contracts with our European customers," Shi told Reuters in a telephone interview.

"We are still aiming for at least 800 megawatts of production for this year," he said. The entrepreneur said production was about 500 megawatts last year. "Business is still good."

Financing for new renewable energy products has become difficult as banks around the world have tightened lending amid the worst economic slowdown in decades.

As demand slowed in the fourth quarter, Suntech laid off 10 percent of its 8,000-strong workforce and suspended a plan to expand capacity to 1.4 gigawatts in 2009.

However, the planned expansion could be restarted later this year if the effects on customers from the financial crisis ease.

"We want to hold capacity at one gigawatt until the financial situation becomes more clear," he said.

"It could come back on line later this year, we will see," he said, referring to the planned capacity increase.

While demand remained strong, Shi said prices had fallen as overcapacity weighed on producers.

"Prices have already fallen 20 percent from Q3 last year," he said, referring to the third quarter, but said that prices have now stabilised.

"I think prices are now more or less stabilised. There was a panic in the fourth quarter," he said.

Shi said lower prices would lead to a rise in demand in Europe, the destination for 80 percent of his output because of state subsidies for clean energy.

And while President Barack Obama's backing of renewable energy in the United States could potentially be another big source of demand for Suntech's products, Shi does not expect to see the increase in demand this year.

"We don't expect a surge in orders from the U.S. because it takes time to happen."