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Skies Darken For China’s Solar Industry

The Wall Street Journal

The woes of China’s solar industry deepened in recent days as one panel manufacturer lost nearly half its market capitalization and another said it might be forced to close down.

Shares in Hanergy Thin Film Power Group Ltd., whose meteoric rise had troubled industry watchers, nearly halved in value Wednesday before trading was halted. The 47% plunge, to 3.91 Hong Kong dollars (50 U.S. cents), wiped US$18.6 billion from Hanergy’s market capitalization. The company declined to comment on the fall — which came during its annual shareholders’ meeting in Hong Kong — but said it would make an announcement later in the day.

Hanergy Chairman Li Hejun wasn’t at the meeting, instead attending the opening ceremony of the company’s clean-energy exhibition center in Beijing, according to a statement issued byHanergy Holding Group Co., the listed company’s Beijing-based parent.

Hanergy’s plunge followed a stock-price tumble by Yingli Green Energy Holding Co. of China. Yingli ranked as the world’s second-largest solar manufacturer by shipments in 2014, after Trina Solar Ltd., also based in China, according to data tracker IHS. Yingli’s shares fell 37% in New York trading Tuesday, after the company said in securities filings that “there is substantial doubt as to our ability to continue as a going concern.”

Yingli said in a written statement Wednesday that it believed some media had taken the earlier statement out of context, and defended the company as being transparent about its risks. Chief Executive Liansheng Miao said in the statement that the company believed it would meet debt-repayment obligations.

Some analysts said Hanergy’s drop was unlikely to be linked to Yingli, which expanded quickly and is now weighed down by debt.

Yingli’s American depositary shares were up 28% in New York on Wednesday afternoon.

China’s solar-panel producers have been suffering for years, pummeled by a supply-demand imbalance as the industry expanded, while demand slackened in places such as Europe because of a weak economy.

While the industry is showing signs of resurgence as China embarks on ambitious efforts to increase solar capacity to curb carbon emissions, panel prices remain depressed because of continuing oversupply, said Jessica Jin, analyst at IHS Technology in Shanghai.

Solar “installations are growing and booming, but the price is dropping,” she said. “So the revenues don’t have quite as big of a jump as the installations.”

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