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Despite significant optimism about green energy following the November 2020 U.S. election, the Invesco Solar ETF (NYSE: TAN) is down 19% year-to-date in 2021.
On Thursday, Bank of America analyst Julien Dumoulin-Smith said he has observed an “alarming decline” in U.S. solar panel imports, and the worst could be yet to come.
The Numbers: Monthly U.S. solar panel imports hit their low point for the year in July, down 22% from a year ago and 18% sequentially. Year-to-date imports from South Korea are now down 31%, while Thailand imports are down 17%.
Smith said the July slowdown is largely due to COVID-19 production shutdowns in Malaysia, Vietnam and other areas of Southeast Asia. Shipment holds and delays of utility scale projects are also contributing to the slowdown.
“We find the import trend alarming – July YTD data in terms of MW is -5% y/y, whereas the overall US PV installations were expected to grow at +30% compared to 2020 levels (on a GW level),” Smith wrote in a note.
So far this year, module imports are lagging their expected growth levels by about 67%.
Uncertainty Ahead: On Sept. 30, the Department of Commerce is expected to rule on whether or not it will implement a tariff on solar panel imports from Malaysia, Vietnam and Thailand. About 80% of U.S. solar panels come from those three countries, and Smith said a tariff could have a material impact on solar imports that are already declining.
For now, Smith said import uncertainty will likely negatively impact solar tracking systems stocks like FTC Solar Inc (NASDAQ: FTCI). He also noted First Solar, Inc. (NASDAQ: FSLR) appears to be relatively well-positioned to manage slumping imports than most of its crystalline silicon (c-Si) peers.
Benzinga’s Take: Solar stocks and marijuana stocks are two groups that experienced huge post-election runs after Democrats gained control of the White House and both houses of Congress in November 2020. Both groups have tanked so far in 2021 after Democrats have so far failed to provide the legislative support investors had been anticipating.
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