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Asia Solar Stocks Surge on Strong Demand Hopes
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Asian solar stocks on Thursday echoed a rally by their U.S. peers, with some surging as much as 20 percent on signs that prices for solar energy components are stabilizing.
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In Hong Kong, GCL-Poly Energy Holdings [3800.HK
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] was up 13.2 percent, Trony Solar Holdings [2468.HK
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] rose 8.3 percent, Apollo Solar Energy Technology Holdings [0566.HK
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] firmed 3.5 percent and Solargiga Energy Holdings [0757.HK
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] climbed 13.2 percent.
South Korea's OCI jumped 14.9 percent.
Most solar stocks retreated by more than 60 percent last year as prices for panels that convert sunlight into electricity fell sharply, erasing profit margins for manufacturers.
The global rally came as investors cheered figures showing a dramatic rise in new solar installations in Germany in the fourth quarter and higher prices for polysilicon, a key raw material.
Some analysts, however, remain wary.
"Investors should take caution in dealing with the shares, especially because PV (photovoltaic) equipment prices are still depressed and there is still huge overcapacity out there," said Hong Kong-based CIMB Research analyst Keith Li.
Li said he expected solar supply globally had hit 40 gigawatts and demand was unlikely to exceed that.
"Unless demand rebounds in a big way, the excess supply will remain an overhang on share prices," he said.
In Wednesday trade in the United States, Chinese solar companies Hanwha SolarOne[HSHL
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], JinkoSolar Holding, JA Solar Holdings [JASO
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], Trina Solar , Suntech Power Holdings [STP.N
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] and Yingli Green Energy Holding led the advance with gains of 23 to 41 percent.
Avian Securities analyst Mark Bachman said polysilicon was selling for about $30 per kilogram in the spot market after bottoming out at about $24. He noted, however, that solar cell and panel prices were still dropping and said more companies would need to go out of business this year to ease the industry's massive oversupply.
"I'm not so encouraged by this today," Bachman said in an interview.
"Investors will turn right around and start to sell these off again as soon as the two-day euphoria is over."
But Deutsche Bank analyst Vishal Shah said in a note to investors on Wednesday that the industry's surprisingly strong fourth quarter in Germany and robust demand in Italy and the United States could benefit the struggling sector in the near term.
"Our checks indicate that inventory levels across the supply chain are now at record low levels and we believe record December month shipments (in Germany) are likely to create a sense of rush among installers" in the first half, Shah wrote.
Solar panel demand in China and India this year could also top industry expectations, Shah said, while U.S. solar installers may seek to buy panels from Chinese manufacturers ahead of a possible import duties.
Other U.S.-listed solar companies also rallied. MEMC Electronic Materials climbed 21.5 percent, SunPower Corp rose 11.1 percent, First Solar gained 7.8 percent, LDK Solar advanced 17.9 percent, and Power-One strengthened 17 percent.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
