ReneSola plunges on plant closure
ReneSola saw six months worth of gains wiped off its share price today after announcing it would shut an uncompetitive polysilicon plant in Sichuan province.
ReneSola swallowed a $194.7m impairment charge associated with the plant – whose discontinuation was decided internally in September – dragging the Chinese PV manufacturer to a net quarterly loss of $200m at a time when many of its rivals have regained profitability.
ReneSola began the year with year with two polysilicon plants in Meishan – known as Phase I and Phase II – and around 10,000 metric tonnes of production capacity.
In addition to its push downstream into modules in recent years, ReneSola, historically a wafer specialist, has also attempted to diversify into upstream polysilicon production, in an attempt to gain a competitive advantage over Chinese competitors reliant on polysilicon from Germany, the US and South Korea.
Most Chinese PV companies that have attempted to play the polysilicon game, however, have been badly burned – and ReneSola has joined the club.
A little more than a year ago, ReneSola says, it began upgrading its Phase I factory – which had about 4,000MT of capacity – and attempted to integrate it with the more-competitive Phase II plant.
Those efforts have failed, ReneSola admitted today.
ReneSola claims it will continue to produce polysilicon at its Phase II plant, leaving it with 6,000MT of annual capacity, a small figure by industry standards.
The company expects to benefit “from lower power consumption and depreciation going forward” as a result of the closure of Phase I plant. It will also benefit from the tariffs Beijing has imposed on US-based producers such as REC Silicon.
ReneSola – which remains a major wafer supplier, even as its principal emphasis has shifted to selling modules – had joined in the broad rally seen across PV stocks this year. As of yesterday, its share price was up nearly 300% in 2013, with most of the gains notched up during the first half of the year.
However, the closure of the Phase I polysilicon plant sent its shares down more than 20% in early trading on the New York Stock Exchange, wiping out all the gains since this summer.
ReneSola expects to ship 3GW-3.1GW of PV material this year, a little more than half of it finished modules, and with wafers making up the remainder.