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May 22, 2013Positive Solar Market Reaction following JASO
The solar stocks have been very volatile. It is very difficult investing in this sector, because the sector has become very unpredictable lately. The 
company which was big not a year ago, went bankrupt today (Q-Cells) and the company which was on the verge of getting bankrupt can see a rally in its stock price (Sunpower). The Chinese Solar stock saw a rally in their prices, after JA Solar (JASO) announced positive gross margins for the first time in the three quarters. However, US solar stocks like FSLR, RSOL and SCTY have shown positive results in the past. The Chinese stocks were not performing good. The two large Chinese Solar companies LDK Solar (LDK) and Suntech (STP) defaulted their bond repayments but are still alive because of the Chinese Government intervention.
Positive reaction was seen in the market after JASO announced a less than expected loss in its numbers. The company stays positive by saying that it would meet all its debt obligations and maintain its cash position.
Reasons why I think there was a Chinese Solar Stock price Rally
The reason that could be attributed to this unexpected price rally could be that whenever there is any little good news in the solar industry, the market reacts very strongly. JA Solar did not make a huge or great announcement that would have led to the price surge. After the fall of LDK Solar and Suntech positive news from another Chinese kin might have rekindled positivity in the market. Also nothing very unexpected has happened as US solar stocks like First Solar (FSLR), Sunpower (SPWR) have given good results recently. The Chinese stocks have had the very lowest valuations and hence might be catching up. Read on GWI Cheap Solar Panels – Five Most Affordable Solar Panel Brands.
May 20 (Reuters) – JA Solar Holdings Co Ltd’s focus on margins over volumes paid off as the Chinese solar products maker halved its operating loss in the first quarter by selling more panels in high-margin Japan.
Shares of JA Solar were up 44 percent at $8.07 on the Nasdaq on Monday afternoon, after touching a year-high of $8.47.
The company said it expects second-quarter total shipments to be between 410 megawatt (MW) and 430 MW. It backed full-year shipments outlook of 1.7 GW to 1.9 GW.
Operating loss fell to $13.7 million in the quarter ended March 31 from $25.6 million a year earlier.
Conclusion
The solar industry is caught in a vicious downturn, as supply far exceeds capacity through the supply chain. Despite fast growing global demand, prices of solar panels have kept on going down and solar companies have bled billions of dollars. Even the lowest cost players such as GCL Poly are losing money as prices have gone far below the actual costs. The oversupply is not getting removed due to government bailouts and support. This has made the whole industry sick and until the supply demand balance happens, new investments and research has been put on hold.