Deserted by China, Taiwanese solar cell makers eye new markets

Tainergy Tech

03/11/2014 15:16

* Taiwanese solar companies consider new plants overseas 
    * Taiwanese firms face stiff competition from China 
    * Price competition in new markets could weigh on margins 
 
    By Swetha Gopinath and Michael Gold 
    Nov 3 (Reuters) - Caught in a trade war between China and 
the United States, Taiwan's solar companies are scrambling to 
find new customers in a sharp reversal of fortunes for an 
industry flooded with orders just a year ago. 
    Solar cell makers such as Neo Solar Power Corp  3576.TW , 
Motech Industries Inc  6244.TWO  and Gintech Energy Corp 
 3514.TW  are chasing contracts in Japan, Europe and emerging 
solar markets to offset a steep decline in sales to China. 
    "We're all quite panicked and looking to international 
markets for growth," Gordon Chen, president of the Taiwan 
Photovoltaic Industry Association, told Reuters. 
    Taiwanese solar cells were in high demand as a means for 
Chinese panel makers to sidestep U.S. anti-dumping tariffs. 
Since Washington extended the duties to Taiwan in July, however, 
Chinese buyers have shifted back to cheaper, home-made cells for 
use in the panels they ship to the United States. 
    This has left Taiwanese solar cell makers with a 1 
gigawatt-sized hole in their order books at a time when they 
have added extra capacity to meet Chinese demand that is no 
longer there. 
    And while Taiwanese companies could skirt U.S. tariffs by 
moving production overseas, their margins would take a hit as 
they would have to price cells cheaper to compete with China. 
    "Taiwanese solar companies will have to be cost-competitive 
to survive," said Edward Guinness, co-portfolio manager at 
Guinness Atkinson Asset Management, which owns Chinese solar 
stocks including Trina Solar Ltd  TSL.N  and JA Solar Holdings 
Co Ltd  JASO.O . 
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
 GRAPHIC: Taiwanese vs Chinese solar cell prices http://link.reuters.com/jyk33w 
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
    Taiwanese domestic demand for solar cells is about 200 
megawatts, a fraction of the nearly 10 gigawatts of production 
capacity that the country is expected to have by the end of 
year, according to renewable energy consultancy firm GTM 
Research. This is also 24 percent more than capacity at the end 
of 2013. 
    The loss of Chinese business is already evident in monthly 
sales figures. 
    Neo Solar reported September sales of TWD1.96 billion ($64.4 
million), 13 percent lower than a year ago, while Gintech 
Energy's sales for the same period dropped by nearly a quarter. 
    Neo Solar's shares have fallen about 18 percent since July 
25, when the United States set anti-dumping duties on Taiwan. 
Shares of Motech and Gintech Energy shares have each fallen more 
than 20 percent over the same period. 
    In October, Taiwanese cells were priced at about 33 cents 
per watt, marginally more expensive than Chinese cells at 32 
cents, but Taiwanese firms have little room to cut prices, said 
GTM Research analyst Jade Jones. 
    Solar cell prices depend both on the price of the wafers 
that go into them and the panels in which they are used, making 
it difficult for cell makers to alter rates. 
     
    OVERSEAS MOVE 
    While moving production or contract manufacturing to 
countries such as Turkey and India is an option, some Taiwanese 
companies are concerned that U.S. sanctions could follow them to 
new production centers, industry executives said. 
    The United States has set preliminary anti-dumping duties of 
26 percent to 165 percent on imports of Chinese and Taiwanese 
solar products. A final decision is due in December, which may 
prompt Taiwanese companies to firm up their plans. 
    A foolproof way to avoid new tariffs would, of course, be to 
move to the United States, but the high cost of production would 
make such a move unsustainable, executives said. 
    "We are evaluating moving manufacturing overseas ... looking 
in particular at Thailand, Mexico and Malaysia," Gintech Energy 
Chief Financial Officer Lay Lay Pan told Reuters. 
    Similarly, Solartech Energy Corp  3561.TW  is in talks with 
a Malaysian firm to begin cell production there. Another 
company, Tainergy Tech Co Ltd  4934.TW , started making panels 
in Vietnam in October. 
 ($1 = TWD30.4700) 
 
 (Editing by Robin Paxton) 
 ((swetha.gopinath@thomsonreuters.com; within U.S. +1 646 223 
8780, outside U.S. +91 80 6749 1130; Reuters Messaging: 
swetha.gopinath.thomsonreuters.com@reuters.net)) 
 
Keywords: SOLAR TAIWAN/TARIFFS