* Panel makers boost shipments to Japan and emerging
* Higher sales prices boost margins, stock performance
* JA Solar, ReneSola shares hit 1-year highs
* Chinese solar market oversupplied, but too big to ignore
By Swetha Gopinath and Thyagaraju Adinarayan
May 24 Chinese solar panel makers are shunning
their overcrowded home market in favor of lucrative exports, a
switch that has helped to arrest a two-year slump in margins and
push shares to 12-month peaks.
Manufacturers such as JA Solar Holdings Co Ltd and
ReneSola Ltd, reliant on low-margin Chinese sales after
trade wars with the United States and Europe, are pushing into
Japan and emerging economies where solar panel demand is rising.
"Opportunities in China are less attractive than in many
other emerging markets," said Daniel Heck, spokesman for
Canadian Solar Inc, an Ontario-based company that has
most of its operations in China.
China plans to add 10 gigawatts (GW) of installed solar
power capacity this year. While this would make it the world's
biggest solar market, excess panel manufacturing capacity has
led to a sharp decline in prices.
Data from business information provider IHS show that
Chinese-manufactured modules were selling in the domestic market
at 57 cents per watt in April, the lowest price worldwide. The
same panels were selling in Japan at 72 cents per watt.
Companies such as China Sunergy Co Ltd are
sacrificing high volumes at home for a slice of the premium
"I expect companies to chase as many high-margin sales as
they can, and to use their remaining capacity in the Chinese
high-volume market if they are able to," said Edward Guinness,
co-portfolio manager at Guinness Atkinson Asset Management.
The results are evident. JA Solar's latest quarterly results
revealed that gross margins were positive for the first time in
In the three months ended March, the company generated 38
percent of its total panel sales from Japan, a market in which
it previously had very little presence. China's share fell to 14
percent from 50 percent in the preceding quarter.
Since the company reported first-quarter results on Monday,
its stock has risen more than 40 percent and hit 12-month highs.
Competitor ReneSola's shares have jumped 30 percent since it
reported on May 16, also touching a year-high.
This reversal in fortune is a welcome change for Chinese
solar companies that have grown accustomed to posting quarterly
losses over the last two years, a period during which global
panel prices have fallen by more than two-thirds.
LAND OF THE RISING SUN
The European Union is considering whether to impose punitive
import duties on solar panels from China, after the United
States levied its own duties last year - a move fiercely opposed
This drove many Chinese panel makers back to their home
market, but tough domestic competition has encouraged them to
look to new markets - and better payment terms - abroad.
Canadian Solar's Heck said investors were also reluctant to
build solar power plants in China as the government had been
slow to implement payment of feed-in tariffs, the incentives
offered to consumers to use more solar power.
Japan, as well as other markets in Asia, the Middle East and
Africa, are helping to fill the gap.
Seeking to cut its reliance on nuclear power since the
Fukushima disaster, Japan is encouraging the installation of
solar panels by allowing users to sell power generated from the
roofs of homes, factories and solar farms to the national grid.
"Japan will be about 5.3 GW and the second-largest solar
market this year, and it has sparked a rather positive global
demand outlook," said IHS analyst Stefan de Haan.
ReneSola aims to generate a third of its sales from the
Asia-Pacific region this year, company spokesman Tony Hung said,
with Japan and Australia becoming key contributors to revenue.
JA Solar, similarly, expects Asia-Pacific to account for 30
percent to 40 percent of shipments in 2013.
But walking away entirely from the Chinese market, which
this year is expected to overtake the European Union as the
largest solar power consumer, is not an option for most players.
To survive in the current low-price environment, some
Chinese companies, including Trina Solar Ltd, also plan
to develop integrated solar power projects, a more lucrative
business than simply selling solar cells or panels.
"Trina's strategy is to move downstream and develop our own
projects, which will allow us to capture more profitability,"
said company spokesman Kevin Zhang.