Photovoltaic internal and external imbalances should speed up industrial integration

Enterprise competition is still difficult to integrate with price-based industries. The root cause of China's photovoltaic crisis lies in the blind expansion of production companies, resulting in excess production capacity. Regulating the development of the domestic photovoltaic industry and promoting independent innovation have become the industry consensus. It is expected that in 2013, the competition among enterprises will still be dominated by price wars, making it difficult for companies to implement product differentiation strategies.

(a) Polysilicon is operating at a low level and industrial integration is expected to bottom out. In 2012, China’s polysilicon production was approximately 70,000 tons, a slight decline year-on-year. Due to various factors such as supply and demand and international trade, 90% of China's polysilicon companies have stopped production. It is expected that in 2013, most of the polysilicon companies that have ceased production will be eliminated, and the recovery of the industry is expected to reach 2014.

(II) The growth rate of battery module production slowed down and industry consolidation will continue. In 2012, China’s PV module output was nearly 23 GW, a slight increase year-on-year. Last year, the United States finally imposed a high “double reverse” tax rate on China’s photovoltaic products. The EU will also make a “double counter” preliminary ruling on China's PV export products in June 2013. It is estimated that the European and American photovoltaic market, which accounts for half of the world’s total, will receive Trade barriers affect the demand for overseas markets that are open to China's photovoltaic products by about 10 GW. In 2013, global module production is expected to be 36GW to 40GW, which is basically the same as 2012. The output of battery modules in China is between 23GW and 28GW, and the degree of industrial concentration is further increased. However, due to the fact that the integration of battery modules did not occur effectively in 2012, 2013 will still be subject to cyclical imbalances in production capacity.

(3) The global market for traditional installed capacity has declined and the domestic market has grown significantly. In 2012, the global PV new installed capacity market will reach 32GW, an increase of nearly 10% year-on-year; China's newly installed capacity will reach 4.5GW, a year-on-year increase of 67%. Affected by the European debt crisis and other factors, the traditionally installed large countries are generally lowering the subsidy rate, and the market development focus is gradually tilting toward emerging PV countries. The Chinese, American, and Japanese PV markets are accelerating. It is expected that in 2013, the global installed capacity of newly installed photovoltaic power will exceed 35GW, of which the European market will only account for 40% of the world's total, which is a 17% drop from 2012. China, the US and Japan will contribute nearly 45% of the new market installed capacity. Under optimistic conditions, China’s newly installed capacity will reach 10GW, a year-on-year increase of 122%, and the market will show a trend of concentrated and distributed power generation. Large-scale photovoltaic power stations are mainly concentrated in the northwestern region, and distributed power stations are mainly concentrated in the southeastern region.

(IV) It is difficult for industry consolidation to proceed, and companies will still bear price pressure. The root cause of China's photovoltaic crisis lies in the blind expansion of photovoltaic production enterprises leading to excess production capacity, regulating the development of the domestic photovoltaic industry, and promoting independent innovation to become an industry consensus. At present, relevant departments of the state are studying and implementing the implementation rules for regulating the development of industries and promoting industry consolidation. China's solar cell products have strong homogeneity among enterprises. Under the condition of disproportionate production capacity, the industry will still bear price pressure. At present, the major manufacturers of battery modules cost about 0.6 US dollars / W, while the domestic market price has been lower than 4 yuan / W (tax included), overseas quotes are also around 0.41 euro / W, is close to or even lower than the corporate Cost of production. It is estimated that in 2013, the rebound in product prices will be greater, and competition among enterprises will still be dominated by price wars, making it difficult for companies to implement product differentiation strategies. At present, China has a number of companies with production capacities above GW, such as Suntech, Yingli, Tianhe, Artes, and Jingao. Their strength is quite similar. If only the survival of the fittest depends on the competition among enterprises, it may undermine the global competitiveness of China's photovoltaic industry. Some large state-owned enterprises that want to enter the photovoltaic industry, in line with the principle of maximizing the benefits of mergers and acquisitions, are also waiting to see and wait for the best timing. Some small- and medium-sized photovoltaic companies will stop production and production, and the industry will see an opportunity to start construction. This will further delay the integration of industries.

Uncertainty in external trade increased industrial transformation and upgrading Accelerated the frequent emergence of international trade protection investigations and exacerbated industrial dilemmas. At present, China's photovoltaic companies are brewing to implement industrial transfer, and they want to avoid trade risks by establishing factories overseas. At the same time, the company's development of the global market is also moving in the direction of diversification, diversification and diversification.

(1) The rise of international trade protection and the continuous deterioration of the external trade environment. Against the background of the slow recovery of the global economy, trade protectionism in some countries has risen. The United States has imposed a high “double reverse” tariff on China’s final award of solar energy products to the United States, and the European Union has also started importing wafers from Chinese PV companies. Battery and component "double reverse" investigation. Since nearly 70% of China's export products depend on the European market, once the EU imposes a relevant tax penalty, the impact on China's PV industry is even more deadly. It is worth noting that the Chinese government attaches great importance to the Sino-European photovoltaic trade dispute and has accumulated rich experience in dealing with it. It is expected that this trade dispute will eventually be settled through consultations. In addition, other emerging countries such as India and Australia also intend to follow suit to launch trade protection surveys on photovoltaic products in China. The frequent occurrence of international trade protection investigation has aggravated China's industrial predicament, and has also brought many uncertainties to China's photovoltaic companies in opening up foreign markets, indirectly increasing their cost.

With low-cost competitive strategies abroad, China has no alternative to start trade remedy measures. Affected by the low-price competition strategy of foreign polysilicon enterprises, the polysilicon market price has rapidly declined, resulting in the suspension of production of more than 90% of polysilicon enterprises in China, and the losses of enterprises that are still maintaining production are more serious. Under the background that the United States and Europe have launched a "double counter" investigation against China's downstream battery components, in order to protect the interests of China's polysilicon industry, China's polysilicon enterprises have applied for a "double reverse" trade investigation on polysilicon products from the United States, South Korea, and Europe. A strategic response to the deterioration of the external PV trading environment. At the same time, in response to the “localization” protection clauses promulgated by some European Union member states, the Ministry of Commerce proposed to conduct consultations with the EU and its relevant member states under the WTO dispute settlement mechanism and initiate the WTO dispute settlement procedure. In the face of aggressive low-price competition and trade protection practices, China can only rely on arguments and can no longer choose to initiate trade remedy measures.

(3) The transfer of industrial development has occurred and the adjustment of industrial structure has been accelerated. Affected by international trade protection practices, China's photovoltaic companies are brewing to implement industrial transfer. They want to avoid trade risks by establishing factories overseas. At the same time, the development of the global market is also moving in the direction of diversification, diversification and diversification, and is no longer limited to the European market. In addition, in order to meet the needs of industrial development and enhance the competitiveness of enterprises, the business of photovoltaic companies has gradually expanded from the previous battery module manufacturing to the downstream system integration and even expanded the operation of the power station. On the one hand, it can stimulate the sales of its own PV modules through the construction of power plants; on the other hand, it can promote business diversification and bring higher investment returns through investment and operation of power plants. Domestic key PV companies such as Suntech, Yingli, Tianhe, and Ates have already involved in downstream system integration business. It is estimated that by 2013, the revenue of the system integration business of major PV companies will account for more than 10% of their total revenue. By 2015, The proportion will increase to more than 40%.

In 2013, China's photovoltaic industry will still be under integration pressure. Although the scale of the industry will maintain a steady growth, but due to the effective reduction of production capacity, it is difficult to promote industrial integration, the market will continue to bear the pressure of supply and demand, coupled with the deterioration of the external trade environment, uncertainty With the increase, the industry is facing greater pressure for transformation and upgrading.

The issue of “triangular debt” has been highlighted to show inertia. In order to ensure cash flow, the accounts receivable period between the upstream and downstream enterprises of the industry is also continuously increasing. The phenomenon of mutual default of accounts is more serious and gradually becomes “triangular debt”. The trend has affected the sustainable development of China's photovoltaic industry.

(1) The operating pressure of enterprises has continued to increase, and the issue of "triangular debt" has been highlighted. The root cause of the current PV dilemma lies in the oversupply of the market and the strong homogeneity of the products, thus causing vicious low-price competition. At present, there has not been substantive progress in industrial integration. The situation of supply and demand imbalances will continue and companies will continue to bear the pressure of price declines. Coupled with the generally high debt ratio of China's PV companies, the average debt ratio of 10 PV companies listed in the United States is 80%. Under the situation of monetary tightening, the company’s cash flow is tight. In order to ensure the cash flow, the accounts receivable period between the upstream and downstream companies is also growing, the phenomenon of mutual default of accounts is more serious, and it gradually becomes a trend of “triangular debt”. Once a company closes down, it is feared that a domino-style enterprise will close down and a large number of banks will not be able to recover. This may cause regional financial risks and affect the sustainable development of China's photovoltaic industry.

(B) The tightening of financial credit, ** presents an inertia. China's photovoltaic companies have similar strengths and generally have high debt problems and tight cash flows. Whoever gets credit support will be able to take the initiative in this tug of war. In China, large financial institutions generally have large amounts of money for large-scale photovoltaic companies. The bankruptcy of companies will also result in the loss of their bad debts. Financial institutions will probably continue to support their old customers in support of credits to support their survival or success in the integration. For example, the China Development Bank will support China's “six large and six small” photovoltaic companies, and these 12 companies are mostly targeted for credit. However, this may lead to difficulties for some of China's leading enterprises to obtain bank loans, and it is also not conducive to the coordination of relevant industrial policies of ministries and commissions.

(C) Large-scale power generation groups are involved in the manufacturing industry, and the procurement of power stations has been highlighted. Large-scale power generation groups are the main pioneers in the future photovoltaic market. Take the Golmud region with the fastest power plant construction in the country as an example. In the newly-connected 583MW power plant in 2011, 63 companies owned by the 5 largest power generation groups accounted for 63% of the total. Enterprises only account for 12.5%. Large-scale power generation groups have strong strengths, rich operating experience in power plants, and the need to develop new energy sources. They also have advantages in the application of “power strips” for power plants and are the main body of future photovoltaic power station construction. In order to control product quality and cost, these power generation companies now have different levels of involvement in the battery manufacturing industry. For example, Guodian and China Power Investment have been involved in the manufacturing process from silicon materials to battery modules. Datang, Huaneng, and Huadian are also brewing into the manufacturing of photovoltaic cells. However, the power generation group's involvement is mainly to support its downstream power station development, and has no intention to vigorously expand its manufacturing process. As a result, its production capacity will lock most of the domestic PV market, which will directly result in a decrease in the domestic market share of PV companies, which will undoubtedly aggravate photovoltaics. The dilemma of enterprises is also not conducive to the decline of the cost of photovoltaics.

Overall, in 2013, China's PV industry is facing problems such as “triangular debt” and difficult support policies. Industry development will also show three trends: market localization, credit inertia, and lock-in of tenders. These are not conducive to the regulation of the industry. And dilemma breakout.