China will begin this year to see the results of a reorganization among solar-component manufacturers prompted by a more than 20 percent drop in prices and tighter margins, according to JinkoSolar Holding (JKS:US) Co.
“Small firms are being marginalized after seven quarters of reshuffling while bigger ones are relatively stable,” Chen Kangping, chief executive officer of Shanghai-based JinkoSolar, said in a March 13 interview in Beijing. “Many small solar- energy enterprises have shut down,” Chen said.
The remarks highlight the changes sweeping the solar industry in China, the world’s biggest supplier of panels, after a supply glut saw some companies fail. The price of solar panels has plunged 23 percent in the past year, according to data compiled by Bloomberg.
Jiangsu Sunshine Co. (600220), a Chinese maker of textile products and raw material for solar panels, filed for bankruptcy at its polysilicon unit in January after failing to cope with a decline in prices. Suntech Power Holdings Co. (STP:US), which was once the world’s largest solar-panel maker, is working to restructure debt as it faces the prospect of failing to make a principal payment today on $541 million in convertible bonds.
“Solar-energy trade disputes and cuts in feed-in tariffs are going to accelerate consolidation,” said Wang Xiaoting, a Beijing-based analyst at Bloomberg New Energy Finance. “The industry situation will become better after 2013 as oversupply is alleviated.”
Panel producers may find it difficult to post profits this year, though the situation should improve as the weakest companies are driven out of business, JinkoSolar’s Chen said.
“Some companies, including JinkoSolar, will escape early from their predicament” because they have lower debt and made fewer bad investments, Chen said.
Domestic demand may peak in the first half, Chen said, adding that his company’s production is running at full capacity.
Solar installed capacity in China totaled 6.5 gigawatts in 2012 and is expected to increase by at least 6.2 gigawatts this year, BNEF data show.
Non-silicon costs will drop by 5 percent to 10 percent this year, though silicon costs will be influenced by the outcome of trade disputes between China and foreign suppliers, Chen said.
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