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4934 - Tainergy Tech Co News Story

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Small Cap
Market Cap £94.6m
Enterprise Value £105.9m
Revenue £59.7m
Position in Universe 2780th / 5978

Deserted by China, Taiwanese solar cell makers eye new markets

Mon 3rd November, 2014 3:16pm
* 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
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