Solar stocks rally on potential China boost

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Solar stocks rally on potential China boost
Credit: © Reuters.

Solar stocks rallied Wednesday after reports said China, the largest maker of panels and other solar-power products, was preparing measures against a price war.

A report from Citi analysts noted that China solar stocks rallied today on news about an industry forum hosted by CPIA calling for potential regulatory measures to control excessive production capacity expansion and mitigate price competitions.

Some of the solar stocks that have rallied include SunPower (NASDAQ: SPWR ), which has jumped 21.9%; Enphase Energy (NASDAQ: ENPH ), which is currently up over 11%; First Solar (NASDAQ: FSLR ), which gained 17%; and SolarEdge Technologies (NASDAQ: SEDG ), which is trading more than 9% higher.

"Based on our due diligence with NDRC in Beijing, the forum was an open discussion. The excessive production capacity in many parts of solar equipment value chain, which are dominated by private companies, has to be addressed by market mechanism," said Citi.

However, they added: "The government is unlikely to set up new policy to deal with prevailing oversupply. Amid oversupply, polysilicon price dropped 2.4% wow to Rmb41/kg last week, below the cash cost level of all suppliers. Wafer and cell prices went down 5-12% and 3-9% wow respectively."

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