China's Suntech Solyndra Implodes

[Daredevil]

China has for some time been subsidizing its solar industry and betting big on clean energy.

But the huge bet seems to be crumbling now, and at the center of it is Suntech Power Holdings, one of the world's biggest solar panel-makers.

In November, a U.S. trade panel approved tariffs of between 24 - 36 percent on Chinese solar-panel imports, after it ruled that domestic solar panel-makers were hurt by illegal dumping.

They argued that Chinese solar panel manufacturers could sell their products dirt cheap because they were extremely heavily subsidized by their government. Suntech was subject to an even higher 36 percent tax.

Suntech has also been the subject of controversy for some time over its finances. Bloomberg reports that the company had been amassing debt for quite a while and that it reached close to $2 billion as of August 2012.

Another huge blow to the company was its discovery that €554.2 million in German government bonds that it was given as collateral for its investment in Global Solar Fund "may not have existed and the company may have been a victim of fraud." That dispute was settled last week.

Then, Suntech announced that it had entered a forbearance agreement with holders of $541 million in bonds due today, and said it will not make the payment but is working with bondholders to restructure the debt.

In a March 11 press release, the company said it had worked with holders of 60 percent of the company's three percent convertible notes and they had agreed not "to exercise their rights under the Notes and the related indenture" until May 15, 2013.

Now they could be sued by bondholder Trondheim Capital Partners LP, according to Reuters. Suntech is also in talks to be bailed out by the government of Wuxi, China where it is based.

Patrick Chovanec, chief strategist at Silvercrest Asset Management, tweeted "we may be on the verge of the first major Chinese bankruptcy since GITIC in 1999."

Chovanec has previously said the Chinese solar industry has "a dozen Solyndras." A quick refresher: Solyndra got a massive loan from the Obama administration right before it went bankrupt. Concerns were raised about the impact of political fundraising. From his interview with NPR:

"Well, they have a dozen Solyndras. They basically have tried to build up an industry by pouring subsidies into trying to pick winners in that industry and right now those companies are failing badly because there's a massive amount of overcapacity that's been created."

Suntech's stock is down nearly 98 percent since 2008 as this chart shows. In the past year, it's been down nearly 80 percent:


CHART OF THE DAY: China's Solyndra Implodes - Yahoo! Finance

 

[Daredevil]

The super-duper might Chinese companies are biting the dust one by one. Its the beginning of ripple effect. Real Estate companies, Steel companies and other manufacturing companies will follow the suit due to overcapacity, bubble, fall in demand, rising wages, anti-dumping taxes etc.

As Warren Buffet once said "Only when the tide goes out do you discover who's been swimming naked."

We know who has been swimming naked

 

[ice berg]

You must living in a bubble world somehow. Never notice the companies that went bankrupt in europe, us etc? People who losing their jobs every day? Dude, we are in the middle of a financial crisis.

Jeez, sometimes I wonder some mods here are living in a parallel universe somehow. The world just pass through them without them noticing.

 

[amoy]

Guess @Daredevil was so excited only becoz it's a Chinese firm who went bust

But even in the US despite governments relief efforts Solar Energy Company Touted By Obama Goes Bankrupt - ABC News

President Obama visited Solyndra in May 2010, heralding the company as "leading the way toward a brighter and more prosperous future." He also cited it as a success story from the government's $787 billion economic stimulus package.

In 2009, the Obama administration fast-tracked Solyndra's loan application, later awarding it $535 million in guarantees from the stimulus funds.

 

[Daredevil]

Guess @Daredevil was so excited only becoz it's a Chinese firm who went bust

But even in the US despite governments relief efforts Solar Energy Company Touted By Obama Goes Bankrupt - ABC News

One of the reason they went bankrupt is because of dumping (selling 80% below market rate) by Chinese solar panel manufacturers which are heavily subsidised by CCP govt.. And that's the reason US/EU have imposed 24-36% anti-dumping tax on chinese solar panels. And lo and behold, the Chinese company bites the dust.

 

[Daredevil]

You must living in a bubble world somehow. Never notice the companies that went bankrupt in europe, us etc? People who losing their jobs every day? Dude, we are in the middle of a financial crisis.

Jeez, sometimes I wonder some mods here are living in a parallel universe somehow. The world just pass through them without them noticing.

I'm only pointing that CCP subisidized companies won't last long despite what they parrot in your vernacular newspapers. Now, all the subsidy given to these solar panel makers went bust because of anti-dumping taxes.

There is a difference between bankruptcy due to inefficiency and incompetency like it happens in western nations and bankruptcy due to faulty policies of CCP which subsidises companies to ram rod other companies.

 

[Daredevil]

Here is why they are imploding

Sun Sets on China's Solar Industry

On Friday, shares of Trina Solar closed at $4.62, down $0.18 for the day. The stock has been falling for a long time, declining more than 85% in the last three years. That's not bad, however, considering Trina is a Chinese solar company. Rival Suntech Power has seen its shares, also listed on the Big Board, drop. They are at about 2% of their 2007 values. And Yingli Green Energy plunged 7.3% on Friday in New York, and it is now trading close to its five-year low.

In last two years, shares of Chinese solar cell producers have fallen by about half, and more price declines are on the way. The prospects for these manufacturers are poor.

More important, the seemingly intractable problems of the sector highlight the limits—and impending failure—of the country's industrial policy. It's not that Chinese technocrats did not accomplish their ambitious goals. They set out to create an industry that would dominate the world, and they succeeded. They aided solar cell manufacturers with easy credit from state banks—perhaps as much as $18 billion of cheap loans—and, some say, subsidies. As a result of central and local government support, Chinese manufacturers began to expand rapidly. Chinese competitors now own 70% of the world's wafer-producing capacity.

Make that overcapacity. "Massive subsidies and state intervention have stimulated overcapacity more than 20 times total Chinese consumption and close to double total global demand," said Milan Nitzschke, president of EU ProSun, in a statement released late last month. The company alleges that 90% of Chinese production had to be exported and that Beijing used subsidies to keep its manufacturers in business.

EU ProSun, a subsidiary of SolarWorld of Germany, has filed a complaint with the European Commission alleging China's subsidies were illegal. The Commission is already investigating charges that Chinese producers have been dumping production in Europe. In July, ProSun filed an anti-dumping complaint with the Commission. European solar panel makers say Chinese companies have been selling at 80% below their cost.

Chinese producers are clearly worried about the investigations in Brussels. Europe, the world's largest solar market, accounted for $27 billion of their sales last year. That was about a third of their production and 7% of all Chinese exports to the European Union.

The U.S., on the other hand, takes around 7% of China solar exports, and what is left of the American industry is filing trade actions against Chinese producers as well.

U.S. manufacturers, led by SolarWorld, have already won preliminary relief. An initial Commerce Department decision in May of this year imposed countervailing duties of between 2.90% to 4.73%, to make up for Chinese subsidies, and anti-dumping duties of about 31%. On Wednesday, Commerce issues its final decision, and producers are hoping those tariffs will be increased.

The International Trade Commission is expected to make its announcement in November. Last year, the Commission voted 6-0 in favor of American producers. Just about no analyst expects a reversal.

Chinese producers are already bracing for the imposition of stiff penalties on both sides of the Atlantic. As a first step, they are using components manufactured elsewhere. That maneuver technically avoids the U.S. duties, at least for the moment. U.S. manufacturers want the Commerce Department to broaden the tariffs to cover this stratagem.

In any event, Chinese manufacturers know they will have to come up with more permanent solutions to avoid crippling trade penalties. Their latest tactic is to buy European competitors. Guangdong Aiko Solar Energy this summer purchased Scheuten Solar of the Netherlands, and Hanwha SolarOne Co. recently announced plans to acquire Germany's Q-Cells, a move Hanwha said was designed to avoid European trade sanctions.

The only problem is that locating manufacturing to Europe won't work due to the high costs—40% higher than China. There are, of course, alternatives. China Sunenergy Co. said it would move panel assembly lines to Turkey this year, and analysts expect Chinese companies will shift production to Thailand, India, and Sri Lanka as well as Taiwan. Yet costs of production will still rise for Chinese producers. In Taiwan, for instance, costs are still 15% above those across the strait in China.

Costs, of course, are crucial. Even with all the advantages of manufacturing in China, the country's largest solar panel makers suffer losses of one yuan for every three yuan of sales.

The industry-wide unprofitability means that Chinese technocrats have to throw their world-dominating industry a lifeline. In the last week of September, the China Securities Journal reported that the state-run China Development Bank, which is specifically tasked with implementing Beijing's policies, would be giving priority to 12 of China's largest solar companies.

More lending to an industry that gorged on credit is only a short-term tactic at best.

The only real solution is closing production lines to get capacity in line with demand. Suntech Power is shutting down about a quarter of its capacity to manufacture solar cells, and it appears that Trina Solar will also slim down its operations in coming months.

Moreover, Beijing technocrats will force other producers to do the same thing. The powerful National Development and Reform Commission wants to see two-thirds of panel makers go out of business. Only the largest producers, which are presently unviable, will survive.

In short, central government technocrats, to salvage their industrial policy, will now have to destroy what they worked so hard to create.

Sun Sets on China's Solar Industry - Forbes

 

[ice berg]

I'm only pointing that CCP subisidized companies won't last long despite what they parrot in your vernacular newspapers. Now, all the subsidy given to these solar panel makers went bust because of anti-dumping taxes.

There is a difference between bankruptcy due to inefficiency and incompetency like it happens in western nations and bankruptcy due to faulty policies of CCP which subsidises companies to ram rod other companies.

It is hard to break it up to you, son, so I will just do it:
Every country subsidise their companies in one way of another.

BP (NYSE: BP) to Exit the Solar Industry

British Petroleum (NYSE: BP) is bowing out of the solar industry for good.It has been a hard road for the renewable energy field during the economic crisis, which led to fewer subsidies for companies, a price dip in polysilicon, and the below-market value of panels from Chinese manufacturers.

It got nothing to do with whether they go bankrupt or not.

You will know too if you take some basic courses in economics.

You adopt or you die. Be it chinese , british, us or what not.That is the golden rule of business.

Knowledge speaks and wisdom listens, indeed. Try to heed your own advice, will you?

 

[Daredevil]

It is hard to break it up to you, son, so I will just do it:
Every country subsidise their companies in one way of another.

BP (NYSE: BP) to Exit the Solar Industry

British Petroleum (NYSE: BP) is bowing out of the solar industry for good.It has been a hard road for the renewable energy field during the economic crisis, which led to fewer subsidies for companies, a price dip in polysilicon, and the below-market value of panels from Chinese manufacturers.

It got nothing to do with whether they go bankrupt or not.

You will know too if you take some basic courses in economics.

You adopt or you die. Be it chinese , british, us or what not.That is the golden rule of business.

Knowledge speaks and wisdom listens, indeed. Try to heed your own advice, will you?

I already broke it to you. The reasons for bankruptcy in western countries is different than Chinese companies. The western companies were prudent and assesses the market and try to exit. But in the case of Chinese companies, their back was broken by anti-dumping customs imposed by US/EU.

Chinese companies have over produced the solar panels which lead to the situation where everyone was selling at a loss. And the overcapacity is a result of direct and indirect subsidies provided by CCP govt. to Chinese companies to dominate world market and increase growth rates with no regard to the demand & supply requirements. Now the companies are suffering.

 

[ice berg]

I already broke it to you. The reasons for bankruptcy in western countries is different than Chinese companies. The western companies were prudent and assesses the market and try to exit. But in the case of Chinese companies, their back was broken by anti-dumping customs imposed by US/EU.

Chinese companies have over produced the solar panels which lead to the situation where everyone was selling at a loss. And the overcapacity is a result of direct and indirect subsidies provided by CCP govt. to Chinese companies to dominate world market and increase growth rates with no regard to the demand & supply requirements. Now the companies are suffering.

Sigh, you just dont give up , do you? with your half backed guesses and ToI news.

Peter Glover: Solar Eclipsed? | The Global Warming Policy Foundation (GWPF)

Energy Tribune: The global solar power industry is in crisis. The industry blames widespread national subsidy cuts and over productivity; China, in particular, being widely vilified on the second count.(yah by people like you. ) However, the real cause of the solar industry's malaise runs deeper, rooted, as it is, in the inescapable fact that, in terms of current technology, commercial scale solar energy remains a non-viable proposition.



Wherever you look the solar power industry is mired in financial problems, all of which lead back to the (life support) of public subsidy, the impact of market-skewing regulations (creating the appearance of commercial viability) and, ultimately, protectionist trade wars (US and Europe v China). In economic good-times, three natural consequences of government-sponsored global industries that can be obfuscated by a network of feed-in tariffs, levies and other 'green' taxes to pay for them. But in leaner economic climes, the real cost of 'free' energy becomes all too clear.

Germany's solar industry has led the way in Europe. Until recently the country was the world leader in manufacturing solar cells. Half of the world's total solar power generating capacity is installed in Germany. But, according to Klaus Dieter Maubach, Technology Chairman at the country's power major EON, Germany's solar industry is in a death spiral. Speaking to Focus magazine, Maubach states that "not a single company is in the black" and that the entire German solar industry "will disappear within five years". His bleak prediction merely echoed the view of investment consultants Citigroup who warnedin March that Germany's subsidy cuts would "nearly kill Germany's solar industry".( but according to our dear DFI mod only China subsidises their companies. Widespread complaints of Chinese solar companies dumping cut price solar panels on the European market have merely added to the malaise. In early September, the European Commission announced a formal inquiry into this allegation that could well trigger a cut-throat solar trade war with China.

But as Eon's Maubach points out with regard to the international solar market, China itself is suffering from precisely the same market problems as all its competitors. While Beijing will attempt to stave off decline through government stimulus, it is only a question of time before the loss of European and US markets for cheap Chinese goods, including solar panels, causes an economic downturn there, too.

In fact, the threat of a Europe v China solar 'war' is little more than a replay of last year's dust up between the United States and China. In the wake of the infamous Solyndra scandal (which Solyndra execs blamed on cheap Chinese imports), the U.S. imposed savage protectionist anti-dumping tariffs. These ranged from 31 percent to as high as 250 percent on imported Chinese-made panels. No surprise then that the Chinese companies should turn their attention to key European markets to offload a product they are unable to sell domestically. The problems for U.S. solar cannot be laid at the door of Chinese competition alone. Once the massive infusion of government stimulus cash ran out and subsidies slowed in early 2011, U.S. solar companies had already begun filing for bankruptcy. And Solyndra wasn't the only company desperate for more cash. One heavily-subsidized firm, First Solar, was even caught using the U.S. taxpayer loan guarantee to sell solar panels to itself. It cant be true, cause according to our dear mod Daredevil US companies will never do this kind things, only the evil commies do that.

So are the Chinese really the chief villains of the global solar piece? Depends how you look at it.

China's over production only came about because Beijing's economic stimulus for its solar industry led to explosive growth and, ultimately, unfettered over production. Given enormous government subsidies there was literally no incentive to slow production down. In the game of who could sustain massive public subsidy longest, cash-rich China clearly won. But the fact is that the sun looks to be setting on China's solar industry, too. Beijing has also become aware it cannot go on subsidizing its solar and renewable industries. China is dumping its solar panels in a bid to at least redeem some of its costs. Meanwhile the dark clouds have gathered over China's economy too with the solar sector there also now facing bankruptcy. Since 2005, Chinese solar companies saw heady growth receiving significant government support as a "strategic emerging industry". But since 2010, the price of the key polysilicon wafers crucial to production has fallen by around 75 percent. In recent times, China's big five firms have all reported disastrous trading losses. Worse still, according to the investment boys at Energy and Capital and others, China's much-vaunted booming economy, already over-heating, is about to implode.

Taken as a whole, government incentive schemes around the world have created a glut of suppliers that the capitalist free market would never have sanctioned. Must be another lie from the author, how dare him to claim that governments all across the world were doing it?! The eclipse of Europe's solar industry is in truth down to simple economic realities hitting home as commercial scale solar power is simply too expensive a proposition to attract serious private sector investment and end massive public subsidies.

In January, Spain's economic crisis forced it to cut its renewable subsidy regime entirely. In April, a near-bankrupt Italian government estimated that its subsidy regime left it facing a $60 billion bill to photovoltaic generators over the next 20 years. In The Great British Solar Scam I wrote about how the UK's bid to cuts its ludicrously generous solar subsidy regime saw it prevented from making subsidy cuts by a European court after the UK solar industry inevitably claimed widespread bankruptcies would result(1).

What marks out both the entire renewable energy sector for economic decline above all else is the fact that it is effectively an expensive government-sponsored enterprise, not a child of the free and democratic marketplace. Now read and read it again until it gets through your head what really is going on.

Consider again the elements colluding to produce the current crisis: the lifeline of public subsidy, energy levies and taxes and market-skewing regulation dove-tailing with incentivized over-capacity, protectionism and, ultimately, trade wars. All marks of an industry kept afloat by ideological fiat and not free market capitalism geared to meeting actual market need.

To gain a final key perspective, a report by United Nations Environment Programme in June announced that global renewable energy investment generally reached $257 billion in 2011 rivalling the $302 billion invested in hydrocarbon power. Germany alone has committed over €100 billion in solar subsidies over the next 20 years – for a power that will produce a very small energy return. In total, renewable energy, of which solar is just a tiny fraction, makes up just 3 percent of our electricity.

More on that story if you follow the link. Knowledge speaks indeed. Heed your own advice.

 

[Daredevil]

Sigh, you just dont give up , do you? with your half backed guesses and ToI news.

Peter Glover: Solar Eclipsed? | The Global Warming Policy Foundation (GWPF)

Energy Tribune: The global solar power industry is in crisis. The industry blames widespread national subsidy cuts and over productivity; China, in particular, being widely vilified on the second count.(yah by people like you. ) However, the real cause of the solar industry's malaise runs deeper, rooted, as it is, in the inescapable fact that, in terms of current technology, commercial scale solar energy remains a non-viable proposition.

Heed to what your own Chinese officials are saying

According to a report Thursday by the Financial Times' Leslie Hook, Li Junfeng -- deputy director of China's National Development and Reform Commission's energy research institute -- Chinese solar companies will have to play a role in the decommissioning of at least half the planet's photovoltaic manufacturing capacity. Worldwide, the industry has about 100 gigawatts' worth of production capacity, with annual demand at just 30 to 50 gigawatts.

The United States has placed steep tariffs on Chinese solar modules, and the Euro zone has threatened to do likewise. According to Hook, though, Li called the trade sanctions "the straw that broke the camel's back."

"According to him," Hook writes, "the real culprit was the rapid, credit-fuelled expansion in Chinese solar capacity that has contributed to today's global production [over]capacity."

Li told Hook that China's central government would not be bailing the manufacturers out anytime soon, and he criticized cities and other local governments in China who had made recent offers of financial assistance to keep their factories open. "If other local governments follow the policies in Xinyu and Wuxi [the cities that gave bailouts], it is like giving solar firms poison to quench their thirst. It will only quicken their death," Li told the Financial Times.

Global Solar Industry Failing Because We're Subsidizing The Wrong Side | Trade | ReWire | KCET

Western companies were doing just fine until China entered with its cheap solar panels and disrupted the whole industry. This was facilitated due to high subsidies by local Chinese governments. And it came back to bite the Chinese companies on the ass.

 

[Daredevil]

More blame on China's door

China's photo-voltaic (PV) industry, better known as the "solar industry", is in the middle of a serious crisis. The issue is particularly fascinating since it essentially serves as a microcosm for many of the troubles afflicting China's economy as a whole, including government encouraged over-investment, an astounding run up of debt, government support of value-destroying firms, resulting trade frictions, and the tension between central and local government goals.

China's solar module supply glut, as with many other products suffering from the country's over-investment driven capacity increases, has thus decimated the global market. For consumers and the environment, this is a good thing, since PV modules are now cheaper than ever, but for other countries' PV industries, the Chinese drive has been painful to say the least, with bankruptcies already hitting Q-cells and Solon in Germany and Solyndra and Evergreen Solar in the U.S. Trade tensions in the solar sector have inevitably increased, with both the EU and the U.S. bringing cases against China for dumping and unfair subsidies, which include underpriced financing, back home.

Lights Out For China’s Solar Power Industry?

 

[W.G.Ewald]

You must living in a bubble world somehow. Never notice the companies that went bankrupt in europe, us etc? People who losing their jobs every day? Dude, we are in the middle of a financial crisis.

Jeez, sometimes I wonder some mods here are living in a parallel universe somehow. The world just pass through them without them noticing.

Obama has subsidized US and Chinese "green" technologies, but the pattern is the money is for his campaign contributors.

James Delingpole – Telegraph Blogs

Obama doubles down on alternative energy - The Hill

Obama touts energy production his administration has hindered | WashingtonExaminer.com

 

[Daredevil]

Ying Ma notes in conclusion:

[T]urmoil in the Chinese solar industry teaches that massive state spending cannot forestall changes in market conditions, though it can distort market incentives and lead to overcapacity, inefficiencies, and other unintended consequences. The logic of the free market applies across national borders and without regard to the wishes of big-government dreamers.

China's state-backed solar power industry looking an awful lot like our Solyndra debacle | WashingtonExaminer.com

 

[mattster]

The idea of massive government subsidies to a specific industry is a 2-phase plan:

1) To kill the worldwide competition by flooding overseas market with cheap products.

2) When you have killed the competition - you slowly raise prices again and wean the industry off the subsidies.

Looks like in China's case - they were on Phase-1 perpetually, and never got to Phase-2.
Quite Funny really !!

Me thinks that some really well-connected High Level Chinese who ran these businesses made out like bandits pocketing government subsidies. They knew it would not last forever, and probably a lot of the money that Chinese Government poured into Solar subsidies is resting in offshore accounts......LOL

I live about 20 miles from the Gleaming shut down Solyndra Solar factory here in Silicon Valley. Its right off the I-880 highway.....I am amazed every time I drive by it. It looks so brand new, even the parking lot.

I wonder how much of this story about Solar fabs also applies to China Semiconductor Chip Fabs ???
The Chinese government has injected massive subsidies to build Chip Fabs......I wonder how many are really profitable ?

 

[Armand2REP]

The real reason is China's lower coal consumption is making competing energy prices cheaper than solar can provide.