Friday, February 24, 2012

(BN) China Encourages Solar-Product Makers to Expand Amid Supply Glut

Bloomberg News, sent from my iPhone.

China Encourages Solar-Product Makers to Expand Amid Supply Glut

Feb. 24 (Bloomberg) -- China set targets for increasing production capacity at "key" polysilicon and solar cell makers to boost domestic installations and spur expansion even as prices tumble amid a global supply glut.

China wants each "leading" company to have 50,000 tons a year of polysilicon capacity by 2015 and targets 5 gigawatts for each leading solar-cell maker, according to a five-year plan for the industry posted on the Ministry of Industry and Information Technology website today.

The move will make the manufacturers stronger and more competitive to help meet demand as China pursues a target of 15 gigawatts of solar farms by 2015, Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, said by phone today. "If the scale isn't up, there's never enough financing for the integrated use of byproducts."

The plan doesn't say how many companies will be involved and whether the targets mean an overall capacity increase. It's "difficult" to estimate future growth, Gao said.

The government's push for expansion comes as prices of solar cells more than halved last year due to global excess capacity. The average spot price for polysilicon has tumbled 59 percent from a year earlier to $29.28 a kilogram, according to Bloomberg New Energy Finance.

"China imported half its polysilicon from overseas companies; this means there's still room for domestic producers," Gao said. "The key is whether they have capability to grab a share in the market and to lower costs." Gao's organization is a conduit between solar companies and the government.

Idled Factories

GCL-Poly Energy Holdings Ltd., China's largest polysilicon maker, was 4,000 tons short of the new target last year, with 46,000 tons of capacity. Suntech Power Holdings Co., the world's biggest solar-panel maker, had annual solar-cell capacity of 2.4 gigawatts as of the end of the third quarter.

The nation has idled about 30 percent of polysilicon production and won't resume until prices recover, according to Xie Chen, an analyst from the China Nonferrous Metals Industrial Association, a trade group that advises the government.

"Chinese firms shut down not only because prices declined, but also they can't drag costs lower than the spot price," she said.

China installed about 2.7 gigawatts of solar farms last year, Gao said. "As planned by the country, the installation will have a steady growth year on year, which will create demand for solar-power products."

Panel makers Suntech and Trina Solar Ltd. expect about 4 gigawatts of solar panels to be erected in the country this year to absorb some of the industry's excess inventory.

To contact Bloomberg News staff for this story: Bloomberg News Byline in Beijing at

To contact the editor responsible for this story: Reed Landberg at

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