China Ramps Up Solar Exports After Reforms Hit Home Market

(Bloomberg) -- The world’s largest solar panel maker is selling a great deal more overseas to keep its domestic industry afloat.

China’s exports in the third quarter soared 66 percent from a year ago after the government’s decision to cut support for the local solar power industry dented domestic demand. Shipments to Australia more than doubled and tripled to Mexico, making up for a tumble in sales to India, its biggest buyer.

China Ramps Up Solar Exports After Reforms Hit Home Market

“Companies realize they have to step up efforts to explore new markets,” said Jiang Yali, an analyst at Bloomberg NEF in Hong Kong. “Without diversified markets, panel makers will struggle to survive.”

The export surge shows how Chinese manufacturers are trying to make up for shrinking sales at home and falling prices. Beijing in June announced a surprise decision to clamp down on new solar plants and curb financial aid to developers after record installations in 2017. That may shrink China’s share of new global solar capacity for the first time in four years to 39 percent from 54 percent a year ago, according to BNEF forecasts.

Producers sold abroad 12.3 gigawatts of panels during July-September, the biggest quarterly exports since at least 2016, according to data from the China Chamber of Commerce for Import & Export of Machinery & Electronic Products. That compares with 7.4 gigawatts the same period last year and 9.6 gigawatts the prior quarter.

The value of the exports in the third quarter rose about 39 percent from a year earlier to $3.56 billion, slower than the growth in shipments because product prices have tumbled, CCCME’s data show. Prices of photovoltaic panels slumped about 27 percent from end-May to September, according to BNEF data.

China Ramps Up Solar Exports After Reforms Hit Home Market

Chinese solar makers “may have intended to sell more overseas due to increasing demand,” said Zhang Sen, secretary-general of the photovoltaic production unit at CCCME. “The policy shift that weakened domestic consumption just provided further impetus for them to do that.”

The rising sales come even as the U.S. and India throw up trade barriers to defend local industry against China’s cheaper solar equipment. The European Union, however, ended anti-dumping measures on China’s products that were in place since 2013 after considering the needs of producers, as well as the bloc’s renewable energy targets.

The capacity of Chinese panel exports to India tumbled 30 percent in the first nine months to about 5.2 gigawatts. Mitigating that slump was a ninefold jump in shipments to Egypt, a sixfold rise to Ukraine and a more than doubling to Australia, Mexico, Brazil and the United Arab Emirates.

China Ramps Up Solar Exports After Reforms Hit Home Market

These countries, mostly consisting of emerging markets, will continue to see significant growth in Chinese solar shipments in 2019, said Zhang. “Large solar plants that Chinese enterprises are planning to develop in Vietnam, Thailand, Argentina, Cuba, Brazil, Ukraine and Kuwait will also drive demand for Chinese panels.”

Markets outside of China may account for about 70 percent of global annual solar installations over the next five years, compared with an estimated 60 percent in 2018, according to Zhang. Foreign countries “will grow far faster than China and become potential key markets” for panel producers, he said.

China Ramps Up Solar Exports After Reforms Hit Home Market

Chinese panel companies with the highest exports in the first nine months include JinkoSolar Holding Co., JA Solar Holdings Co., Canadian Solar Inc., Trina Solar Ltd. and Risen Energy Co. Their shipments accounted for more than 45 percent of the nation’s total.

Overseas buyers prefer panel manufacturers with brand recognition and scale because they want to be confident of the quality and durability of the products, said BNEF’s Jiang. They will avoid dealing with companies that are at risk of bankruptcy, she said.

“As costs of photovoltaics decline, global solar installations will definitely grow,” said Sebastian Liu, director of investor relations at JinkoSolar, the world’s biggest solar panel maker. “This trend is irreversible, so is China’s solar exports in the new year.”

©2018 Bloomberg L.P.