The tit-for-tat action is causing pain for solar panel manufacturers worldwide Ben Birchall/PA Emily Ford Shanghai Published at 12:01AM, November 2 2012 The Times
China has fired the latest salvo in what experts are describing as an escalating global trade war in the solar industry, with an attack on the European Union over alleged unfair pricing and subsidies for solar panels.
After the EU said in September that it would act on manufacturers’ complaints and investigate China for “dumping” solar panels – selling them overseas at a loss – Beijing yesterday retaliated by accusing the EU of the same offence, saying that it would also launch an investigation.
With its domestic solar industry in the throes of crisis, an aggrieved China in July declared that it would open anti-dumping investigations against South Korea and America, which in turn moved to impose steep taxes on Chinese solar panels over alleged unfair pricing. These tit-for-tat incidents are the cause of widespread pain for the global solar industry, with solar panel-makers worldwide battered into consolidation and bankruptcy as the global slowdown leads countries to turn to cheaper sources of fuel, such as natural gas.
Jeremy Leggett, chairman of the UK Taskforce on Peak Oil and Energy Security, and chairman of SolarCentury and SolarAid, said that the dispute had become a “global trade war”.
“There are understandable concerns on both sides – the European companies are worried that domestic industries are being destroyed by low Chinese pricing. It is looking increasingly serious. People have got to sit down and talk about it rather than dealing with it through lawyers,” Mr Leggett said.
“I am very concerned about a global trade war placing at risk an industry that is vital for the future of the world economy.”
A vast tide of billions of dollars of government-backed and private investment led the number of Chinese solar equipment manufacturers to balloon from the mid-2000s onwards. Yet the industry now finds itself in a state of collapse, owing to massive overcapacity and shrinking demand from its biggest customer, Europe, which accounted for €21 billion (£16.8 billion) of sales last year, or 60 per cent of its output. Two of the biggest companies, LDK Solar and Suntech, have been forced to accept government bailouts and experts expect manufacturing output to halve in size in the next two years. Li Junfeng, a leading energy policymaker, last month described the once-booming sector as “a patient on life support”.
Chinese solar companies, which were already thought by many to be receiving unfair levels of support from Beijing, have responded to falling demand by slashing prices.
Brad Jester, director of projects and business development at Clean Energy Associates, a renewable energy consultancy in Shanghai, said:
Very health cash balance sheet, but will be a bit less now. I would say PVCS is battling down all the hatches until the doom & gloom of the economy is over and the price rises again for their products. They still have a couple of large contracts that when cancelled we will receive more cash. But an important aspect is to keep an eye on China to see if imports to Europe for silicone is stop due to low price & unfair trading. Complicated to say the least. If this happens PVCS could do well again as prices would rise. I think their cash positions is about 15p a share & long term (2-3 years) PVCS could be a real winner. IMHO. I just wish they would tell us shareholders more about what is going on. It would not surprise me if they do come out with a one off dividend payment soon, but only time will tell.
I've been having a look at the company website. They are not short of money as far as I can see. I note how much it has fallen over the last couple of years but also the uplift about 3 months ago. Any views on the medium/ long term future of the sp?
Three trades today & two of the 22 & 23p. MM games maybe. Very strange & it went up 5%. Is some news coming out Monday morning? Time will tell! We have had no news from PVCS which feels like months now. Wondering if they are planning their own futures? Bought most of my shares in PVCS in the 40's, but now got an average of around 13p off memory. GLA
PV Crystalox Solar at its height in 2008 was tickling the £1billion mark, however as of Friday it is worth just £33million. Its main plant in Germany is sitting idle waiting for the price of panels to recover. Analysts have pencilled in a big loss for the first half of the year. Even if prices do stage a comeback it seems that PV Crystalox’s glory days are surely behind it.
Today's Investors Chronicle has a piece on PVCS in its Company Results section, entitled "Restructuring to boost PV" in which it rates PVCS a "Speculative buy".
From IC's conclusion -
"Following a €90m contract settlement with one of its customers, PV Crystalox is now sitting on €122m in cash - three times its market value - and a formal restructuring is likely to provide a boost to its share price."
This follows on from the "oversold" write up on PVCS in the Financial Times a week ago.
And so means that the 'big two' - i.e. FT and IC - are both taking a bullish stance on the company in the wake of its interim results last week.
The global PV market is now at a transition in its development with growth of installations in China, Japan and the USA expected to compensate for the reduced demand following policy adjustments in key markets in Europe. Consequently, little global market growth is forecast in 2012/2013 and the pressure on pricing and the intensely competitive market are expected to continue.
The Board expects that the difficult trading conditions will persist and that the Group will incur an operating loss in the second half. Cash conservation measures will continue with significantly reduced production levels and customer shipments. Full year shipment volumes are expected to be in the range 100-120MW. The Group's average selling prices are expected to be maintained significantly above spot levels.
While the Group continues to believe in the positive long-term outlook for PV, it is mindful of the intensely competitive environment which is likely to persist in the short to medium-term and which has already led to many companies exiting the industry, either voluntarily or through insolvency. The Group has a strong net cash balance and the Board will make the necessary decisions during the remainder of the year to serve the best interests of shareholders.
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