Yingli Solar Flirts With Record Low Leading Broad Solar Sector Decline Amid Trade War Concerns

Amid concerns that tensions are escalating between China and the West over the solar panel sector, one of China's largest solar panel makers, Yingli Green Energy, saw its shares drop 7.9% to a near record low of 2.10 on Tuesday, leading a broad decline among Chinese solar stocks traded in New York. At 4:15 pm Wednesday, Yingli was trading at 2.05 a share.

Yingli has fallen for four consecutive days, shedding 27% since last Thursday. (Yingli CEO Miao Liansheng has a net worth of about 260 million as of Tuesday, including just over 100 million worth of Yingli shares. He made Forbes' list of the 400 richest Chinese individuals in 2010.)

Losses were across the board among Chinese solar-panel manufacturers. LDK Solar touched its 52-week low on Tuesday, closing down 5.6%. Suntech Power declined 2% on Tuesday. Trina Solar slid 5.5%. On Wednesday, LDK Solar continued to drop 1.3%. Trina Solar was down 0.75%. Suntech Power rebounded slightly by 0.7%.

On a phone interview on Tuesday, Jesse Pichel, analyst for Jefferies Group, said investors were increasingly worried about the solar trade tensions between China and the Western countries, which may hurt the solar industry and dim the already gloomy global economic outlook.

European solar-panel manufacturers on Tuesday brought a confidential trade complaint against their competitors in China, according to a report by The Wall Street Journal. The complaint was brought by Germany's SolarWorld AG, one of Europe's largest panel makers, and other companies in the industry. They accuse Chinese rivals of selling their products at an unfairly low price in Europe.

The move follows the success of SolarWorld's American subsidiary in persuading the U.S. Commerce Department in May to levy 31%-250% anti-dumping tariffs against Suntech, Trina Solar, Yingli, and other Chinese photovoltaic module manufacturers. (See my colleague Todd Woody's story here and Simon Montlake's take here.). The anti-dumping tariffs are among the highest in American history.

According to data released by the Coalition for American Solar Manufacturing, imports of Chinese solar cells and panels into the U.S. fell 45% in May from a year ago.

China has threatened to hit back. On Friday, China's Ministry of Commerce said it would look into anti-dumping and anti-subsidy claims on polysilicon imported from the U.S., citing evidence from several companies, including GCL Poly-Energy Holding, LDK Solar, and Daqo New Energy. The ministry also said China would impose trade duties on U.S. shipments of polysilicon if the U.S. penalized Chinese solar companies.

If punitive tariffs are imposed, they might likely affect U.S. polysilicon manufacturers such as Hemlock, MEMC, REC and South Korea's OCI Solar, which has its solar facility projects in the U.S..

Signs of investors distress about the situation are clear from the market performance. Yingli Green Energy has plunged more than 26% since July 2. LDK Solar, one of the world's largest solar wafer makers, declined 25% from a month ago. Meanwhile, the stock of SunPower Corp., a U.S. solar panel maker based in San Jose, Calif., has dropped 20%.

Pichel said trade tensions tend to rise as the global economic outlook remains murky, and rhetoric has intensified as U.S. elections loom in November. He expressed concern that China might retaliate against U.S. suppliers and the conflict would worsen frictions between the two countries, which may slow or halt the momentum of solar installations in the U.S. and stall job growth.

Western solar companies have complained for years that Chinese manufacturers get improper government support in the form of low-cost access to land, bank loans and other resources. China acknowledges it has given the industry research grants and tax breaks. But it says those are in line with its free-trade commitments and practices by other governments.

The Coalition for Affordable Solar Energy, a U.S. group that represents solar installers, urged both the U.S. and China to avoid duties, saying tariffs on either end cost jobs and make solar energy less competitive against fossil fuels, according to a Reuters report on July 20.

Source: http://www.forbes.com/sites/laurahe/2012/07/25/yingli-solar-flirts-with-record-low-leading-broad-solar-sector-decline-amid-trade-war-concerns/