JA Solar Holdings Co. (JASO:US) expects solar-panel prices in China to recover as developers scale up projects and government measures encourage developments.
“Current prices have bottomed and will rebound later” as Chinese orders rise, said Xie Jian, president of JA Solar, the world’s third-biggest solar-panel maker by production capacity. “Demand will be quite positive” from August, Xie said.
The expected recovery in China, which accounts for more than 60 percent of global solar panel output, offers an early sign that manufacturers are succeeding in soaking up supply by building their own projects. The government’s push to promote developments closer to regions where electricity is needed most -- so-called distributed solar projects -- may also spur orders.
Panel prices in China declined about 10 percent in the first six months of the year compared with the second half of last year, according to Bloomberg New Energy Finance.
Higher tariffs imposed in the U.S. have had the opposite affect to what’s happened in China. Panel prices have increased about 15 percent since early June when the U.S. decided to apply preliminary duties on Chinese solar equipment imports, according to a global measure of panel prices.
The U.S. Commerce Department acted again on July 25, proposing expanded penalties on some Chinese solar-energy imports in a victory for the U.S. unit of SolarWorld AG, which accused China of shifting production to Taiwan after it lost an earlier case.
The latest U.S. finding is preliminary, like the one in June, and calls for duties ranging as high as 165 percent for some Chinese manufacturers and 44 percent for those in Taiwan.
“Industry profit margins will drop a bit in the second quarter from the first” as prices fall, said Shanghai-based JA Solar’s Xie, who expects China to install 12 gigawatts of solar power this year.
In anticipation of more demand at home and elsewhere, China’s four biggest panel producers are expected to boost capacity by at least 30 percent by the third quarter compared with the end of 2013, according to data compiled by BNEF.
At the end of last year, China had 43 gigawatts of panel production capacity out of a global total of 63 gigawatts, according to BNEF data.
“Panel prices may hold at 57 cents a watt for a while and may rally” if there’s a rush by developers to install projects in the fourth quarter, said Sebastian Liu, director of investor relations at JinkoSolar Holding Co. (JKS:US) “The industry saw installations at a less rapid pace than expected, leaving some inventories in the first half,” which lowered prices, said Liu.
The world may add 45 gigawatts of solar power this year, 12 percent more than a year earlier, BNEF estimates. As of the end of June, China had installed as many as 4 gigawatts, or about 29 percent of the new subsidized capacity allowed by China this year, Xie estimated.
To contact Bloomberg News staff for this story: Feifei Shen in Beijing at firstname.lastname@example.org
To contact the editors responsible for this story: Reed Landberg at email@example.com Iain Wilson, Keith Gosman