Solar firms tap into new markets to ease glut

In a factory in east China's Jiangxi Province, workers are assembling solar parts to be shipped to new markets the company has been exploring after the European Union slapped a provisional tariff on Chinese solar products.

Seven months ago, LDK Solar Co., Ltd, a leading Chinese producer of solar equipment, was on the verge of bankruptcy, as it reported a net loss of 97 million U.S. dollars in the fourth quarter of 2012 amid shrinking demand from Europe, the world's largest market for photovoltaic (PV) products.

"We are far from getting back on our feet, but things have been improving in the past two quarters," said Tong Xingxue, president and CEO of LDK Solar.

In the first quarter this year, the company narrowed its losses to 59.5 million dollars, down from the 131 million dollars incurred during the same period last year.

The improvement came after LDK Solar began to diversify into other markets rather than simply clinging to Europe alone. The company signed a string of deals outside Europe, finding new outlets for its solar products and thus keeping its business afloat.

In April, the company agreed to provide 63 megawatts of solar modules starting from August for Thailand solar firm EA Solar Nakornsawan Co., Ltd. This was followed by another deal with Realforce Power Co., Ltd in east China's Shandong Province to supply 120 million 6-inch silicon chips, amounting to 500 megawatts in generating capacity.

Analysts say China's solar industry is bracing for a major reshuffle after years of trade rows with Europe and the United States. Punitive tariffs imposed by the U.S. and increased costs of Chinese imports to the EU will undoubtedly blunt Chinese firms' competitiveness in the two markets.

The EU's decision in June to impose an interim tariff of 11.8 percent for Chinese solar products has threatened to price Chinese imports out of the world's largest solar market.

Though talks between China and EU have signaled fresh hope to avert a heightened tariff in August, Chinese companies can no longer survive by solely relying on the European market.

Sources with knowledge of the price undertaking talks told Xinhua that the two sides were close to agreeing on a minimum price of between 0.55 to 0.57 euros per watt for Chinese solar imports, a deal that would further squeeze profit margins for export-oriented solar panel manufacturers in China.

Instead, these companies are looking at emerging markets where demand is on the rise, albeit slowly. According to research firm NPD Solarbuzz, demand for solar products in the Asia-Pacific region is expected to rise 50 percent from a year ago to 13.5 gigawatts in 2013.

That includes China, where the government is hoping to turn the world's largest PV manufacturing country into a major consumer of such products. The State Council, China's cabinet, vowed last week to increase solar power generating capacity to 35 gigawatts by 2015.

If achieved, the goal would make China the world's largest solar market and significantly ease the production gluts that are pushing many domestic PV firms out of business.

Of the 31 gigawatts installed generating capacity added globally in 2012, 4.5 gigawatts were in China, according to Wang Bohua, secretary-general of China Photovoltaic Industry Alliance.

The State Council also vowed to aid efficient companies in the sector with adequate financing and improve pricing and subsidies to spur solar consumption.

"Our top priority is to expand domestic and other emerging markets," said Qian Jing, global brand director of JinkoSolar.

The company expected its shipments to Europe to slash from 50 percent to 20 percent as it pivots its focus to South Africa, India, Japan and Canada, where Qian said the company has deals with newfound clients.