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Shares of several Chinese solar companies tumbled Tuesday because of investor fears about the repercussions to the Chinese solar industry from the pollution leaked by a JinkoSolar Holding Co. factory, which triggered violent protests and shut down production at the plant.
Jinko said it will clean up the pollution. The company said it would resume production at the plant, in Haining city west of Shanghai, within a few days.
"Such an event only serves to reinforce investor concerns of inferior quality and lower manufacturing standards" of Chinese solar manufacturers, said Jeffrey Bencik, an analyst for Kaufman Bros. Chinese solar companies sell products more cheaply than their U.S. and European competitors do because of quality concerns, said Bencik. The production problems at the Jinko plant could worsen investors' perception of quality and weigh on pricing for Chinese solar products.
Jinko Solar's U.S. shares dropped 52 cents, or 8 percent, to $5.98 in late trading, their lowest point since the company's initial public offering in May 2010. In the past three months, Jinko's shares have tumbled 74 percent.
Chinese authorities said the factory had failed to address earlier environmental complaints and that the protests followed mass fish deaths in late August due to runoff from heavy rains.
The episode suggests that solar power, while it can reduce the need for burning heavily polluting coal and other fossil fuels, can also be a risk to the environment. The process of producing photovoltaic cells uses various chemicals and materials that can also be toxic.
Among other Chinese solar companies, shares of Suntech Power Holdings Co. plunged 52 cents, or 15 percent, to $3.05; Trina Solar Ltd. dropped $1.30, or 14 percent, to $8.21; and LDK Solar Co. tumbled 53 cents, or 12 percent, to $4.13.
In addition, Yingli Green Energy Holding Co. dropped 30 cents, or 9 percent, to $3.27; Renesola Ltd. fell 26 cents, or 10 percent, to $2.38; and JA Solar Holdings Co. fell 18 cents, or 8 percent, to $2.02.