Author: Robert Dydo

We have received reports that major solar manufacturers in China are using the upcoming National Day Holiday as an opportunity to shut down capacities.  The sentiment on recovery has been very low and the particularly damaging blow to the conditions in China is the situation in Europe, and now a second investigation has been opened against the Chinese.

We have been reporting information on market, where we already established the existence of hard conditions, which led thus far to a number of companies experiencing shutdowns and layoffs. Our checks with industry contacts located in China had given us an idea of just how widely spread the shutdowns are. In addition, the magnitude of the closures has not been seen ever before.

GCL-Poly will shut down its wafer operations for a period of 20 to 30 days, while poly operations are running below 50% capacity.  The company has an estimated wafer inventory of over 200 million wafers (800MW), and some even speculated that as much as 300 million wafers worth 1.2GW remains in the company’s inventory.  The main reason for the accumulation is that long-term buyers have closed their cell capacities and the price has been bottoming at RMB 6.8/pc, or $0.93/pc, while peers in China are selling below RMB 6.5/pc. Further, GCL sales figures dropped significantly as we entered September. Sources have disclosed that GCL has sold less than 200,000 wafers to Taiwan so far this month.  This is a drastic drop from 40 million wafers in June for the duration of the peak time.  None of its long-term accounts had taken more than 20MW, or more than 5 million pieces this month, while regular deliveries are in the range of 10 to 20 million wafers. Hanwha SolarOne Co Ltd (NASDAQ: HSOL) is now GCL's number one LTA in volume as of September. Hanwha took 3 million this month. In comparison, Trina Solar Limited (NYSE: TSL) is below 1 million and JA Solar Holdings Co., Ltd. (ADR)(NASDAQ: JASO), we are told, took none.  GCL-Poly has not announced new prices or strategy for pushing the inventory out.  The decision is expected after the holiday break.  

Other companies are also curtailing their operations. JA Solar is said to be running less than 10 wafer processing lines out of 90. Most of the factory personnel will be on the two weeks’ vacation.  Suntech Power Holdings Co., Ltd. (ADR)(NYSE:STP) is running fewer than 5 out of 70. Trina has its capacity below 30%.  Hanwha is running around 70%, and so is JinkoSolar Holding Co., Ltd. (NYSE: JKS). We are told that Hanwha is becoming more stable and its branding and organization is getting recognition on the market.   Xi'an LONGI Silicon Materials Corp plans 100% shutdown for 10 days. Another, LDK Solar Co., Ltd (ADR) (NYSE: LDK), plans a two weeks’ shutdown. The company had run at below 20% capacity up to this point. 

Multicrystalline wafers are down to RMB 6.0/pc, or $0.81/pc, for T/T transaction, yet orders continue to be very rare. Mainstream pricing is RMB 6.5/pc, or $0.88/pc, with credit for one or two months. Payment has increasingly become a factor in getting orders in China, as cash is so tight in the whole cycle.  

The usual demand for monocrystalline wafers is almost dead, except for some specifically designed domestic projects.  South Korea has become the only place where there is still some mono demand to open sources, while Japan is closed off to outsiders, we were told. Many mono makers, such as GCL (through OEM) and LONGi, have been approaching Korean customers aggressively. It's said that LONGi has just sold 156mm mono to STX, on a sample test basis, at a price of $1.05/pc. And, they promised the price would remain in 2012.

Shutdowns are not only affecting companies in the Mainland. Green Energy Technology from Taiwan reported 50% of its wafer capacity temporarily shut down as well.  Sharp is selling plants in Japan and plans to withdraw capacity from the EU and the US. The company plans to concentrate on the domestic market with an objective to increase to 40% market share from 30%.