China solar stocks rise on rumours of a polysilicon production reduction
Chinese solar stocks and polysilicon price rose after local media reported on Tuesday that producers may reduce their output.
According to Tuesday's report by China's Securities Times, Nasdaq listed Daqo New Energy rose initially nearly 18%, while Tongwei shares reached their trading limit. This was in response to a rumour on the market that a leading polysilicon manufacturer had proposed production reductions to support prices.
The report also said that it was rumored that China's six largest polysilicon producers would buy all remaining production capacity and set a price range.
Daqo and Tongwei are the top producers of polysilicon used in silicon wafers, which convert sunlight into electricity.
Both companies have not responded to immediate requests for comments on the reports.
Overcapacity in both industries and falling prices have led to major producers going into the red. However, calls for government intervention or for companies to reduce their production on their own have not yielded any results.
Daqo closed Monday up 6.9% while Tongwei rose 7.56% at 0819 GMT Tuesday.
The STAR China and CSI China New Energy indices both rose by 0.79% and 0.95% respectively. Comparatively, the Shanghai Stock Exchange's SSE Composite Index was up by 0.17%.
Prices for polysilicon also hit a new high. Tuesday's closing price for the most traded polysilicon contract at the Guangzhou Futures Exchange was 38,270 yuan (5,315.65) per ton, a rise of 0.91% from Monday. This is the highest level since April 25.
Tongwei posted a net loss in the first quarter of 2.6 billion Chinese yuan (about $360 million), while Daqo reported a loss $71.84million. (1 Chinese yuan = 7.1995 renminbi). (Reporting and editing by Kate Mayberry; Colleen Waye in Beijing, Jenny Su in Beijing, Violet Li in Shanghai.
(source: Reuters)
