In addition to potential headwinds threatening growth in demand in relation to ongoing anti-dumping trade disputes in the US, Taiwanese solar wafer and cell companies are facing increasing pressure from Chinese clients, Yuanta Securities Co (元大證券) said last week.
For the whole of last week, Gintech Energy Corp (昱晶) shares fell 12.04 percent and Neo Solar Power Corp (新日光) shares dropped 5.56 percent, compared with a 0.36 percent increase for the TAIEX over the same period.
On the over-the-counter market, Giga Solar Materials Corp (碩禾) shares plunged 13.57 percent last week and Motech Industries Inc (茂迪) retreated 5.5 percent, much bigger than the GRETAI index’s 0.36 percent decline.
“Chinese clients have been cutting their orders to Taiwanese solar vendors significantly since mid-June, and have demanded price discounts and certificates of origin for delivered solar cells,” Yuanta analyst Felix Hsu (徐凰原) said in a client note on Friday.
“Some clients have even chosen to not pick up products that have been shipped to China,” Hsu said, suggesting that this is to have a direct impact on firms’ results for this month and next month.
Hsu’s remark came after several solar firms — such as solar cell makers Motech and Solartech Energy Corp (昇陽科) as well as solar wafer makers Sino-American Silicon Products Inc (中美晶) and Gigastorage Corp (國碩) — on Thursday told their shareholders that they were conservative about short-term business outlook, although they remained positive on global demand in the second half.
The brokerage’s channel check showed that business of Gintech, Giga Solar and Motech have recently suffered from the “no-show” of Chinese clients, he said.
While Gintech and Neo Solar are both operating at full capacity, pricing pressure and uncertainties about trade disputes between China and the US and Europe continue to pose concerns, he said.
This month, the US Department of Commerce imposed import duties between 18.56 percent and 35.21 percent on solar panels and other related products over Chinese government subsidies. The department is to issue a preliminary ruling on duties next month.
If the US adopts a “Two Out of Three” rule wherein products are deemed to have a Chinese origin if two out the three components — wafer, cell and module — are made in China, Chinese solar vendors are likely to ask their Taiwanese suppliers to provide a certificate of origin or even share tax expenses, which would undermine the profitability of Taiwanese firms, Hsu said.
“Order growth is expected to recover in August at the earliest after major clients’ inventory digestion, but firms could still face margin pressure,” he said.
Silicon wafer and solar cell prices dropped for the ninth week in a row last week and they are likely to continue falling in the near term, Hsu said.
Yuanta therefore holds a neutral view on the solar sector as a whole, he said.
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