With EU sales likely capped, China solar firms will need new markets
By Charlie Zhu
HONG KONG (Reuters) - A weekend deal between Beijing and Brussels to regulate trade in solar panels will limit Chinese firms' growth prospects in the European Union, the world's largest solar market, and force them to step up sales to 'emerging' markets at home and in the United States and Japan.
News of a deal - which had threatened to boil over into a wider trade war covering wine and steel - helped push up shares in Shanghai-listed solar panel makers Hareon Solar 600401.SS and Shanghai Chaori 002506.SZ on Monday, outperforming a 1.7 percent drop on the Shanghai Composite Index .SSEC.
"It's good news they finally found a solution," said Haiyan Sun, a senior executive at panel manufacturer Trina Solar Ltd TSL.N, which competes against Yingli Green Energy Holding Co Ltd (YGE.N: Quote), LDK Solar Co Ltd LDK.N, Suntech Power Holdings Co Ltd STP.N, JA Solar Holdings Co Ltd (JASO.O: Quote) and Canadian Solar Inc CSIQ.O. "The focus for us is to rapidly develop other markets, like China, Japan and the United States."
Globally, Chinese manufacturers are on track to ship a total of 22-23 gigawatts (GW) of solar modules this year. Total estimated global demand is 35 GW, according to industry analysts.
For Chinese firms, future growth is likely to be in their domestic market, Japan, the United States, the Middle East and South Africa, analysts said.
China's solar panel demand should reach 7-8 GW this year, said Glenn Gu, senior analyst at IHS consultancy in Shanghai, while shipments to Japan and the United States could reach 3-3.5 GW and 2 GW, respectively.
While the small print of the EU deal has yet to be announced, one EU source said it had been agreed that Chinese firms could sell into Europe at a minimum price of 0.56 euro cents per watt, with a total ceiling of 7 GW a year - around half of the EU's 2012 demand of about 15 GW.
Chinese solar panel production quadrupled in 2009-11 to 55 GW as it took advantage of renewable energy market growth amid concerns about climate change. But the global financial crisis and euro zone paralysis forced EU governments to withdraw generous industry subsidies. That, along with cut-price Chinese imports, pushed many European solar firms into bankruptcy. Continued...