China pulls out all stops to revive the Loss making Solar Panel Makers

The Chinese try to revive its zombie companies

The Chinese solar stocks cannot stop increasing in value as the government pulls out all stops in trying to stem the bankruptcies happening in the heavily oversupplied industry. The Chinese State Council has raised the solar target to a gargantuan 35 GW by 2015 as it looks to increase the demand for its zombie solar panel makers Suntech (STP) and LDK Solar (LDK). This has helped turn around the sentiment towards the solar panel companies many of which were trading in pennies. Read more about Chinese Solar Panel Industry.

China is also pushing Europe to not impose large duties on Chinese panel imports, which could crush major exporters like Trina Solar (TSL), Canadian Solar (CSIQ) and others. A negotiated solution is likely with restrictions on the volume and pricing of solar panel exports from China to Europe. This will help stabilize the industry which has been wracked with uncertainties due to solar trade wars between major blocs. China has also retaliated strongly against USA by imposing 50% plus duties on US polysilicon imports. This has resulted in Hemlock and REC getting seriously hurt. These 2 are amongst the top 5 poly producers in the world with Hemlock having a massive factory to make polysilicon. As the global poly industry is also heavily oversupplied, this won’t hurt the Chinese solar panel makers as prices of the poly raw material won’t increase. Only the US poly producers are in deep shit because of these duties.

Read about Cheap Solar Panels in China.

China is also going to give special tax breaks and incentives to encourage consolidation in this sector. It will allow mergers to happen in the industry as the weaker players seem to have no exit currently. The company is also encouraging the smaller poly producers to align/partner with the large Chinese chemical conglomerates in order to gain the scale and competency to become competitive in the market place.