Half of China solar firms halt production, says report

[FBaggins]

About 50% of the firms in China's solar industry have suspended production, according to the country's Guangzhou Daily.

The daily cited the solar energy division of CSG Holding as claiming that half of the solar firms have stopped production, 30% have halved their output and 20% are trying to maintain certain levels of production.

Digitimes Research's findings have indicated that only tier-one solar firms in China had capacity utilization rates over 80% in the first half of 2011 while tier-two and tier-three firms were already facing falling capacity utilizations rates.

Guangzhou Daily stated that oversupply and significant price drops are the reasons for the firms to shut down production.

The report also indicated that China firms have been facing increasing production costs following news on September 2011 that one of the large-size solar players had a chemical leak at one of its plants that polluted a nearby river. This means the other solar firms now face increasing costs to prevent such pollution while suffering from sharp price drops and low demand.


http://www.digitimes.com/news/a20111209VL200.html

[msongs]

1. sounds like attempts at price fixing nt

[FBaggins]

2. If you mean intentionally cutting production like OPEC to control prices...

...then it may "sound" that way, but it isn't.

The contagion that has been killing solar companies in the West has spread to China. Few of the companies are strong enough right now to manipulate the market in that specific way. You just eventually get to a point where you have so much supply built up in the warehouse that when orders don't increase as you had hoped... you just can't afford to keep running the line.

It will all shake out eventually, but it's an ugly time in the sector right now.

Take, for instance, the largest producer of solar wafers in the world (LDK). They just had their quarterly report a couple weeks ago. Their cash (etc) on hand fell by over half to about $250 million... while their debt grew to almost ten times that level and they have a negative cash flow.

Were they not in China's version of "too big too fail", they would likely be bankrupt.

[Systematic Chaos]

3. Are they running out of "cancer villages" already?

Pfffff -- come on China, it's only human lives we're talking about! When has that ever stopped you before? Don't you want to be on the forefront of solar being the salvation of humanity?



(This doesn't really need the :sarcasm: emoticon, does it?)

[NickB79]

4. Don't worry, I've been assured this is a good thing for the solar industry

For the rest of the planet, however, that's another matter altogether.