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Xinyi Solar continues overseas expansion

The company is investing in production capacity expansion in Malaysia

The most striking aspect of solar glass manufacturer Xinyi Solar’s first-half update is the number of times mention is made of the May 31 decision by the Chinese government to rein in public PV subsidies.

While it has taken three months or so for the impact of the policy decision to filter through into corporate documents, the impact was undoubtedly dramatic, most remarkably through Xinyi’s admission that in June the company saw an 18.4 percent drop in solar glass sales, based on average volumes from the previous five months.

The company is taking an upbeat tone despite echoing widespread predictions that the downturn in the world’s biggest solar market will mean fierce competition and consolidation among manufacturers.

Xinyi claims that falling solar prices – which it says saw the ASP of the anti-reflective coating solar glass it produces tumble 20 percent in the first half, with worse to come in the months ahead – will open up developing market opportunities overseas. This is to some extent borne out by notification it has already diversified its markets. The figures show that 85.4 percent of Xinyi’s solar glass sold in China in the first half of last year has already fallen to a 71.9 percent slice one year on.

That perhaps explains the company’s determination to proceed with plans for three new production lines in Malaysia, each with a daily melting capacity of 1,000 tonnes. The first of those fabs is set to be up and running this year, although the second and third now come with the caveat they will be operational “in accordance with market conditions.”

However, it should be noted that the overseas markets delivering volumes for Xinyi – Malaysia, South Korea, North America, India and Thailand – include two nations currently or soon to be assailed by import tariffs.

With the company having brought forward the scheduled closure-for-repairs date of its 500-tonne-per-day production line in Anhui from early next year – while at the same time announcing “the group will continue to add new solar glass production capacity … despite the industrial downturn” – suggests that it has little choice but to forge ahead.

What is clear from the latest update to the Hong Kong Stock Exchange is that the company’s triple-pronged approach is being curtailed, to return to the core business of making solar glass.

The EPC arm of Xinyi is in the process of being spun off and listed separately, although its figures will continue to be consolidated into the company accounts.

The development side of the business continues to reap the benefits of what will rapidly come to be treated as a golden age of Chinese PV installation but the cold reality of the post-May 2018 market means Xinyi’s 400 MW annual installation target is being quietly buried.

The update has a bullish tone and the test for Xinyi will be whether it can leverage its Malaysian expansion to help drive overseas shipments. The figures offer cause for optimism, but it will require more than the “proactive and flexible marketing” suggested by the manufacturer as a way forward, to keep those production lines at full capacity.

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