Three major solar manufacturers are producing panels at full speed and contemplating plans to expand capacity to meet surging demand in Asia.
Trina Solar Ltd. (TSL:US), the third-largest panel producer, increased its forecast for panel shipments this year to as much as 2.4 gigawatts from an earlier range of 2 gigawatts to 2.1 gigawatts, according to a statement yesterday. That matches the Changzhou, China-based company’s estimated annual production, and it may boost capacity next year.
SunPower Corp. (SPWR:US) and JinkoSolar Holding Co. (JKS:US) said they’re also running their factories at maximum and mulling ways to boost output. The industry has been battered by excess production that drove panel prices down 61 percent since the start of 2011. Rising demand in Asia is soaking up the surplus and will prompt the biggest producers to expand factories, said Angelo Zino, an analyst at Standard & Poor’s in New York.
“I think it’s safe to say that we’ll see a number of tier one manufacturers add capacity, probably in 2014,” Zino said in an interview yesterday.
Trina shipped 647 megawatts of panels in the second quarter, up 54 percent from a year earlier. It expects to deliver as much as 680 megawatts this quarter.
“We do have some little bit of room, but sooner or later we have to think about how we can expand our capacity,” Chief Financial Officer Terry Wang said on a conference call with analysts yesterday. The company will “think about maybe next year the capacity expansion.”
Busy factories are boosting margins. Trina’s gross margin was 11.6 percent in the second quarter, up from 1.7 percent in the prior quarter.
“The solar industry was put into a bad, bad downturn, a horrendous margin environment,” said Dan Ries, an analyst with Maxim Group LLC in New York. “New markets, China, Japan, are growing, more than offsetting slowing markets like Europe. If you hold capacity constant, demand continues to improve, you’ll get to a healthy balance and then after that to a shortage.”
Trina’s American depositary receipts, each worth 50 ordinary shares, gained 15 percent to $7.82 at the close in New York.
The 102-member NYSE Bloomberg Global Solar Energy Index (SOLAR) has gained 37 percent this year as demand surges in Asia. Japan is promoting wider use of solar power after closing nuclear facilities following the 2011 Fukushima nuclear disaster. China has said it expects to install 10 gigawatts of solar panels this year.
Jinko reported Aug. 14 its first profit since 2011, buoyed by strong demand in Japan and China. Chief Executive Officer Chen Kangping said during a conference call that the Shangrao, China-based company expanded annual production capacity to 1.5 gigawatts from 1.2 gigawatts, which won’t be enough to meet its 2013 forecast of 1.5 gigawatts to 1.7 gigawatts of panel shipments. The factories are running at about 90 percent of capacity now.
“We are almost sold out until October,” Chief Marketing Officer Arturo Herrero said on the call. “I wish we could have more megawatts in our production.”
SunPower said on July 31 that it’s exploring ways to increase capacity, including expanding a joint venture with AU Optronics Corp. (2409)
“As we look at the balance of this year and then deep into next year we see ourselves fully allocated,” Chief Executive Officer Tom Werner said on a call with analysts.
Yingli Green Energy Holding Co. is the largest panel manufacturer by 2012 shipments, followed by Suntech Power Holdings Co., according to data compiled by Bloomberg.
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