Looks like the end of the year boom in Germany will provide only a short pps rally with solars.
The inventory levels are still too high.
However, seeing how the market jumps at this little bit of good news shows that the bottom is getting close.
Solar is a long term play anyways with grid parity expected to be reached in 2015. Expect the market to flip by then with a solar bubble with inflated P/E's. The only difference in this cycle is the bubble might actually be justified when demand explodes upon reaching grid parity.
///If production is cut by companies which are losing money and can not compete at this prices and demand is higher then supply ,then ASP's will rise///
There in lies the million dollar question. Where was capacity 2 years ago and where is it now.
We know that the big 8 to 10 suppliers can handle most of the world demand with current cpacity. You still have the rest of China and the world.
With most of the Capacity installed recently, would a higher ASP not bring back offlined capacity that is competative? This is the mahority of the new capacity in the world and it was not isntalled in America and Europe.
Reports of Taiwan idle capacity coming back online is part of that. Their cost have dropped right along with Poly and therefore with demand picking back up, they may bring it back online if the ASP rises and teir inventory is cleared.
What is the impact of a suddend surge to 33GW? That is a 33% plus increase. Is the sheetmetal crucibles and glass available? Does the cost of materials like Poly silverpast climb back nibbling at the gross profits?
I believe YGE implied a quick recovery in demand is actually bad longer term as the ability to weed out weeker plays falters which keeps competition higher.
Does the target $0.78 target year end costs climb back to $0.82 or $0.83 for some eating a few pennies of the gross from demand to higher profits.
Q1 is week in volumes, that is a given. It is likely to still feel some of the feedthrough of high inventories by some like LDK.
So how qick if demand picks up does prices rise back say Poly to $35 or $40 that could add 5 to 6 cents to costs for many?
These are variables when calculating upside based on higher ASP from higher demands.
.> If you were so convinced about ASPs of $.90 or below (even refering to some 2013 rediculus quote that no tier-1 will sell at), just by asking a week later if ASPs of $1.00 are on a horizont is a classis flip-flopping - perma pumper in 2010 to perma basher in 2011 and now back (I agree not yet) to a possible pumper for 2012 (after all you did amply $20 PPS for JKS). <
You calling me a flip flopper? Why ?
If over supply brings ASP's to $0.90 or lower and higher demand brings ASP's to maybe $1 or higher has nothing to do with flip flopping. It is the market price people are willing to pay for modules. If production is cut by companies which are losing money and can not compete at this prices and demand is higher then supply ,then ASP's will rise. I am not saying they will ,but they could.
same goes the other way around. Higher supply then demand and ASP's will drop again.
SHORTS will still dream. THAT TIDE HAS CHANGED DIRECTION.
Solar stocks have low valuation.
How can one expect price to keep rolling up, after the 30%+ rise yesterday? BREATHE BREATHE.....
This will people a chance to think about real investing in solar stocks now, for the recovery. Price stabilizing and this is the best news.
<<The only flaw I see is that many companies will be able to produce at $0.80 later this year or less for some. That puts a price gap at $0.30 to $0.40. That would kick the gold rush theory in and bring idle capacity back for many and expansions for others thus either driving up Poly costs or creating an oversupply and price supression.>>
I'm OK with margins like that, Snake. It also should push PPS back to highs of Jan/Feb of 2011 (if not Oct/Nov of 2010). It will give me all lost profits back. And I'm fine with glut after that, because we already just experienced what happens next.
For JKS I have had modeled 1.12GW with an average ASP of $0.93 with the peak ASP in Q2 with a slight bump to $0.95. My processing starts at $0.61 and ends at $0.58. Opex is running around $104M and interest is modeled around $14M. I am looking at $40M +/- for the year. I see Q2 as a return to profitability and the likelihood they actually add capacity starting in Q3 as Q4 production exceeds the 1.2GW they claim to have.
Well said pg6.
What you can take from this is Boss now believes that the downturn is over and one might expect that demand elasticity Hobo talks about to kick in pushing prices and profits potentially higher. There are some like ABC that have believed that Germany could support $1.20 ASP at the subsidy levels. IF he analysis is correct then there is room for upside.
The question is how much could it snap back. 2 years ago wafers snapped back 20% over 3 quarters or some 15 cents. In todays pricing ranges, that is only 6 or 7 cents. On modules coincidentally that would put them in the $1.10 to $1.20 range. So is it unreasonable for ASP to reach $1? no it is not unreasoanble. Would you model it as a conservative investor? No. As an agressive investor, yes.
The only flaw I see is that many companies will be able to produce at $0.80 later this year or less for some. That puts a price gap at $0.30 to $0.40. That would kick the gold rush theory in and bring idle capacity back for many and expansions for others thus either driving up Poly costs or creating an oversupply and price supression.
Do you have ASP's for Q2???
Maybe with production shut downs,prices will go up to $1.
That would bring JKS to $3.66 EPS on 1200MW.
Even at $0.95 ASP JKS will make $1.43 EPS.
Can we get a PE of 6??
There in lies the questions. ASP for Q4 was identified around $0.95 of less by JKS.
YGE has guided current ASP $0.08 below Q4 guidance of $1.05 or down 7.5% from Q4 guidance and YGE has suggested year end could be around $0.90 which could be more and could be less.
JKS has stated they expect to see Q1 volumes down 10-20% over Q4. That is not a demand rebound for them.
European companies the ones limping by near death are hoping Q2 could stabalize demand and ASP.
These were recent press releases and comments from different companies.
I understand inventory is taken offline in Europe, but in the grand scheme of things it is minimal to overall capacity. They are trying to reign in capacity in China, but there is still way to much capacity.
I do not know what level your taliking about for cogs, but JKS was forecasting $0.60 by year end 2012 for processing. I think it could be achieved earlier and potentially lower.
There is really to much volatility built into solars for 2012. Granted a dime greater in gross adds lots of monies but how feasible is that across the board vs the downside risk?
By the way, 1.2GW production is a 50% yoy growth rate. The market is exected to grow at 0-20% depending on when and who is talking.
Last year companies were forecasting 80-100% growths and expanded as such.
The only company that has indicated it will continue to expand in 2012 is TSL. And that is Honey Capacity. I believe that LDK will liekly add another 1-2GW of cell/modules just because Peng does.
That takes the offline capacity back online.
As of now 10-20% down from 200MW is 150-170MW for Q1.
The growth I talked about whole year has another 3GW to it. So if 2011, has 26GW, you have 33GW to 35GW for 2012. On the other hand, businesses shut down their operations. Schott announced closing of 500MW wafer plant, last month they closed cell lines, 105MW left in Norway for REC. The list of 11 companies starts to resemble top dogs of the industry. All along plan, drawn 12 months ago in Beijing.