Fri Mar 16, 2012
ReneSola and China Sunergy forecast higher shipments for the year as they pin their hopes on emerging solar markets such as China and India, but these less lucrative markets may not help lift up prices of solar products.
Most solar companies have indicated that they are moving to emerging solar markets to offset steep subsidy cuts in top markets Germany and Italy, but competition and paltry demand in markets such as China and India are squeezing margins.
Investors cheered ReneSola’s strong revenue and shipment forecast on Friday, sending its shares up as much as 23 percent on the New York Stock Exchange. The stock, which has lost 71 percent of its value in the last one year, touched a 4-week high of $3.02 on Friday.
China Sunergy shares reversed course to trade down 5 percent on theNasdaq after the company forecast a weak first quarter. The shares have lost 82 percent of their value in the last year.
The broader MAC Global Solar Energy Index .SUNIDX, which has fallen 61 percent this year, rose 1.4 percent on Friday.
For 2012, ReneSola expects total shipments at 1.8 gigawatt (GW) to 2 GW, up from 1.2 GW last year.
“We will maintain our position in Europe and expand our market share in high-potential markets including India, China and Australia,” China Sunergy Chief Executive Stephen Cain said in a statement.
China Sunergy estimates total shipments at about MW to 550 MW, up from the 420.3 MW it shipped last year.
“China Sunergy confidently expects that the Chinese market will make up 15 percent to 20 percent of our shipments in 2012,” a China Sunergy executive said on a call with analysts.
For the first quarter, ReneSola expects revenue of $180 million to $190 million, compared with analysts’ estimates of $155.5 million, according to Thomson Reuters I/B/E/S.
REIGNING IN COSTS
Bigger peers such as First Solar (FSLR.O), Trina Solar (TSL.N) and Suntech have sought to reduce production costs to make the renewable power source less reliant on subsidies that make it competitive with fossil fuels.
On Friday, ReneSola said it will continue to invest heavily in production of polysilicon, the main raw material in the solar industry, in a bid to keep costs low and cope with pricing pressure.
To reduce the cost of making solar products, a number of companies have started in-house production of polysilicon.
ReneSola expects to spend $100 million this year to increase polysilicon production, a company executive said on a conference call with analysts.
China Sunergy said it expects prices of polysilicon to decline in 2012 and it will “stringently control costs.”
China Sunergy, which expects a net loss for the first quarter, believes weak demand and oversupply will continue to hurt its business in at least the first half of the year.
“The second quarter could be the worst quarter of the year,” a ReneSola executive said on the call.
He said the company expects prices to stabilize and even rise in the third quarter, leading to positive margins.
However, ReneSola expects an over-supplied market to last until 2013, pressuring prices.
Reporting by Vaishnavi Bala and Swetha Gopinath in Bangalore
Editing by Don Sebastian and Gopakumar Warrier