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rana
66 Comments
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
again you say things but do not give any data.
i don't use google for research but i do use reliable reaserch firms. if you were to check what i said about WFR you would have seen that there are WFR estimates and reaserch firm estimates. but in any case, at least i give references, you just say things and give no data from any credible source (search google isn't a source, and if that's the case i'll tell you the same, check google and you'll find many sources that say that we will still have supply and demand problem.)
regarding utilities you are correct, petrolium was just 2% at 2006. natural gas was 20% and coal was 49%. all 3 tend to move together in the bigger trend. that's 71% of US electricity production. as usual here is a link for this data www.eia.doe.gov/kids/i...
but i guess you think that shipping costs for polysilicon and wafers (in cases it's needed) is more important than price of key raw material in the utilities costs.
as i said, we will all be thankful for references for your data so we will all get the correct picture and bail if needed. but for some reason you insist on saying stuff and not backing it up with real research. i have no clue why you do that and frankly i don't care. i do care about how it can influence some people and for this reason i will keep criticizing posts that are not backed up with real data, which can be checked by everyone.
and if there are so many researches out there in google from reliable resources it will be really easy for you to post a link and will also be very nice as we will all better educated and will have more data with which we will base our decisions.
good luck.
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
i also didn't see the data about what is the total production expected to be in the years ahead.
i can understand that you may FEEL this is the case, but if you want estimates yo can go to WFR annual report and see some data about supply and demand based on reaserch firm and WFR estimates and there are more reaserchs that are showing the opposite of what you're FEELING.
you can also go back in time 2-3 years and see supply and demand estimates and how reality today is much higher than any old estimate.
untill you'll give us the data in an orderly manner, or at least links to the data you're talking about (let alone that in some places in Japan USA and few other places we are already under grid levels) your post is irrelevant and immaterial.
i am sure we will all be thankfull if you'll show us some hard evidence as it can save us a lot of money if this is the case, but as long as you're posting things that are coming to you while you're walking in your sleep, please save us the time and post it elsewhere.
here we want facts. we have no problem taking a loss and moving to the next investment if it's based on sound reasoning.
you're GLOBAL PRODUCTION IN MW AGAINST THE TOTAL SUBSIDY MONEY is nonsense, unless you wan to show us that oil will go down massive in the next few years and why and show us how other positives for this industry are going to turn around.
and off course we prefer to take side with all the companies in this industry that are on a wild race (which will end sometime in the future and consolidation will take it's place according to Darwin rules) than to see few lines that you post here with no real data to support it.
if you want to tell us about the risks it's not needed as we all read them in the companies prospectuses and F-20's.
thank you but no thanks.
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
moneycentral.msn.com/i...
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
Polysilicon
Supply, Demand, & Implications
for the PV Industry
starting at page 5 there is an explanation of the methods used for polysilicon processing.
there is a lot of other data in this paper that is worth noticing
hope this is also helpful
hope this will also be helpful
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
in my book this will cause a race after the polysilicon that will cause prices to rise
if this is not clear and easy to understand i give up
wait, i'll give an example. let's take lumber for example.
there are two companies. one is taking the lumber and cutting it with machines and the other in cjina uses people with tools to cut the logs into pieces of wood. both havethe same end produce and they supply exactly the needs of the market.
suddenly someone stole all the macjines of company 1 and there are no macjines to buy.
the market now had only the supple from the human labor and it's just 50% from the market needs.
prices will now rise and the companies with the best margins will probably be able to buy this supply while others will get into troubles.
this is an example that i made up and has nothing to do with reality so don't start posting that it's wrong. take it and change it to an industry you know if you don't like tyhis example.
i hope this helps even more.
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
"If a Si4 shortage will devellop (probable) it will effect them and not Trina, nor the price of average contracted Polysilicon, at least not the 12-20 % reduction expected by nearly all supply analysts."
"That said, there is one company, REC of Norway, which has attempted a pilot PBR project in Moses lake, together with the Siemens (traditional, reliable) process under one roof. Well, what happened is the pilot failed, more or less, and the problem was that it delayed the entire (traditional Siemens process) polyplant.
Problem for REC: poly needed for solar cells in 2008, but could not be produced at Moses lake, had to buy on spot market: stock tanked and the poly spot price upped to $500/kg (scary!), much earlier then predicted by Photon consulting."
link to what happened at moses lake project:
www.solarbuzz.com/news...
there is something illogical in what is written. if there was a problem on the feedstock for FBR technology and it i said that it would have no influence on the price of polysilicon how come in another paragraph it is said that these problems in the moses lake project made the price of polysilicon go to 500$ and if so is ther no effect on all buyers of polySi?
to the point - siemens (with it's varations), FBR, MG- SoG and others make polysilicon. there may be differences in purity, but cell and module manufacturers will buy this polysilicon. this is the SUPPLY SIDE that companies that use this silicon see (including IC companies).
suppose a company that uses the FBR technology is being effected by shortage of Silane gas. the end result is less polysilicon in the market.
company like WFR is a big supplier for Chinese companies with STP in the front. if there will be no Silane gas cab someone really believe that the price of polysilicon will not be effected?
if someone thinks so - better stop investing and go fishing. you'll save money.
the post that aqua wrote starts very well as he's going into the production proccess with some more depth.
the conclusion and the deductions are horrible and the funny part is that it contridicts itself within the same post.
that being said i might be too hard on aqua and this gunther guy of his, as they do try to help all of us, but please try and give facts and not write a wish list. most people will make the mistake of believing what is written and fall deep, not taking into account that a mistake can be made (especially if they are in the right side of the post with thier portfolio).
good luck to all
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
CSIQ - at the F-20 page 7 on the PDF version "we do not believe that the supply shortage will be alleviated in the very near term"
TSL - F-20 PDF page 5 "we do not generally purchase polysilicon from the spot market.." "based on our experience, we believe that the average price of polysilicon will continue to remain high in the FORSEEABLE future..."
JASO - short explanation of the nature of the contracts with silicon suppliers F-20 page 6. page 39 "we believe the average price of polysilicon and thus silicon wafers will remain high in the near term......"
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
it will be nice if you'll just post the links to the recommandations and a short post than to post an endless post with no real good data.
i for myself love SOL and it's my no. 2 after SPIR, but reading your post didn't help me one bit. i read the zacks rec on some stocks and it's usually quiet worthless.
if you reallt know SOL than you would know that they have been struggling lately getting thier hands on reclaimables (and reclaimables prices went up around 20% last quarter). they said in thier report that they may need to go and buy silicon on the spot market which might not be good for forward margins (at least in the short term), the reclaimables issue will put more pressure on the spot price.
Jack - first we need to remember that the 500$ price tag was a one time issue (when WFR said that they have problems the market went balistic) and the price we look at as a problem is the 400$ mark. in my opinion it's unlikely we will see a drop to the 200-300 area that people are talking about in the near future.
i already stated that 2 companies wrote it in thier F-20 reports and for now here is a link of SOLF F-20, at page 38 "We expect the current silicon shortage will continue into 2008 and 2009."
files.shareholder.com/...
i have yet to read few more F-20's and i'll post other remarks if i'll find them.
TSL - i love this stock, but i have one problem and it's the fact they aren't raising nore funds. still, it's ranked as no. 3 after SPIR SOL in my portfolio.
why do they see lower cost for the second quarter? i have no exact answer, but i can give some ideas.
first let's remember we have spot prices and long term contracts which are priced well under the spot market.
we also need to rmember that many of the contracts to buy silicon in the future are contingent. the buyers can negotiate the price and some are take or pay contracts.
the same goes with the cell and modules contracts. buyers can cancel orders and like in real estate and like what we saw with AKNS that got many canceled orders for installing and it halted some of the buying from distributors, they will do that if things turn south.
since TSL has many long term contracts it can get much better prices than spot.
maybe in other quarters they had to buy lot of supply in the spot market.
maybe they are going to produce more in house and they think it will the margins better.
maybe and maybe and maybe
it's possible that maybe they are just wrong.
i don't have a crystal ball and i just use logic to analyse the given data. if some companies are scaling back on the plans to build silicon plants it might be that they think prices will plunge or that they have problems raising the money for it.
when i see these companies scale back and i hear that growth is above projections and i see raw material to produce silicon is a problem and that the market in june for spot prices was strong and the prices didn't retreat to the level before WFR glitch i must be skeptic about the near future (2008 and maybe longer).
i'll be a happy camper if prices will decline' although i would always prefer an orderly manner, since wild decline can bring a halt to many planned projects.
overall TSL will be a great buy if it will complete some kind of funding as it will need cash to keep expanding as they plan. for now it's a good buy. SOL turned from good to great as they finished the secondary in June. the problem of funding is reported in each F-20 of a solar company (most of them) at the risk factors. TSL says it also, so we must take what they say into account. they night be writing this to cover thier hinies or they might be thinking this for real, we need to take it seriously.
i'm sorry i can't answer the question with good sound data that is complete clear and undisputed (it would have been great for me 2 :))
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
www.pv-tech.org/materi...
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
here is a link to an interview with WFR ceo. it explains another restraint to the silicon production problem.
even if there are 1000 faclilities beingbuilt to produce 10 times the market demand they will need silane gas in order to produce the silicon.
silane gas producers are few and they are not keeping up with demand. they keep expending but the question is will they be able to do it in time with all new apacity coming in the next 3-4 years. for now the answer seems to be NO.
some chinese producers are bidding for silane gas anywhere they can. if theycan't get what they need we will have lot of potential silicon capacity but we will be unable to reach this capacity as the silane raw material is becoming a real bottleneck.
solarenergyblog.blogsp...
good luck
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
very good comments jack.
one thing that isn't correct is the assumption of the declining silicon costs. it's like 2007 all over again.
if you'll read SOLF F-20 they already say that the silicon situation will probably stay the same at least into 2009. another company also stated it but i don't remember which.
also pricing of wafers according to official sources in taiwan went up during june. silicon went down and reclaimables wnet up with a differential of around 60-70$ between silicon and reclaimables. SOL mentioned that reclaimables are problematic now which will send it and some others to the silicon market.
i also assumed deep declines in 2009 till 2 months ago. but all this june dats and a little of may data is making me rethink my assumption of declining prices in the near future. also if some companies will only get partial funding some will have to decrease the production expansion.
another issue that is problematic is gasses. in order to produce silicon the companies need special kind of gas. WFR stated some chineses companies are trying to buy it from her. if they can't put thier hands on the gas they will be unable to achieve the expansion goals.
all that said i like this sector a lot. like jack said i have no clue which company will be the winner and which will be the loser.
i added to my positions on SOL SPIR TSL LDK CSIQ
Polysilicon-Based PV Manufacturers: Clarifying the Financial Issues
where do the changes of the working capital come from?
was FSLR operating cash flow positive from day 1?
will thin film cost advantage persist if silicon prices plungs?
......
without digging deep to these questions and explain eaxh one there is no merit for this article and many others that are being written here.
we all know the risks and those that don't can go to any prospectus or F-20 report to read many pages that explain them. from credit risks to legislative risks to warranty risks and raw materials risks etc...
example - i am selling to 100 customers. i am new business in huge growth industry. this Q each customer buys 1000$ worth of products. last quarter they baught 500$ worth and next quarter they will buy 2000$. i hold 90 days of inventory. i give cutomers 90 days credit since there is lot of competition. i buy raw materials from 4 suppliers. i pay them in advance 90 days. raw materials are 50% of the revenue. my operating margin is 15%. i have endless cash in my accounts. there are no other expenses or income. all customers have AAA credit rating. i have 1000 competitors.
let's check how my books will look like.
Q0- i sold 50,000$ (100 customers * 500$ each). cost of raw materials was 25,000$. i paid to the suppliers advances of 50,000$. i had inventory of ~25000$ at the begining, and ~50000 at the end of the Q0. i had operating profit of 7,500$. customers paid 25,000$ for last Q0 and i gave them new credit of 50,000$.
in my books - profit of 7500$ (50000*15%)
working capital changes -
inventories - ~25000 (50000-25000),
accounts recievables - 25,000 (50000-25000),
advances to suppliers - 25,000 (50000-25000)
overall i had a profit of 7500$.
my operating cash flow was - 75,000$+7500$=67500$.
in Q1 - my profit will be 15000$.
my operating cash flow will be (assumung growth rates are the same and all other things also the same) -
changes of working capital - 150000
operating cash flow - -135000
if all stays the same we will keep doubling every Q.
if growth stops, after 2 quarters we are turning and becoming operating cash flow positive.
so in the bottom line (and for everyone that is reading the motley fool articles please be advised to be careful as they don't pay attention to these issues and just work through the bottom line of the cash flow parts while they make fun of people that just read the bottom line of the P&L) when growth rates will start to decline the cash flow trend will turn (operating) and if it won't we will mark it as a big negative and will have to understand why or to stay out of the company. for this industry with it's charectaristics it is no surprise that all the companies have the same issue. this is the game in yhis part of the industry (PV) and if you don't like it stay out. don't tell me that the fact that i have to pay in advance for goods that are in high demand is ony a negative. if it wasn't in high demand there was no growth and it was just a stagnant industry.
and regarding FSLR - it uses tellurium. this is one rare ingridient. can the company secure all it needs in this front to keep the pace of growth? when the heads of the company are being asked to answer that they always skip this issue. i was investing in FSLR but i'm staying away because of this behavior. if they feel they need to hide it i feel uneasy. they might be the big winner in the sector, but i like transperancy and avoiding answering this issue of this magnitude is red sign for me. right or wrong doesn't matter. i don't like thier game so i stay out now. the fact they were operating cash flow negative in the early years wasn't a negative. although i invested after they were already positive.
if my example is too simplistic i apologize. it is like that in the hope everyone can understand.
i didn't answer all the above questions as this will be a very long post and i am already tired. everyone needs to do thier own research and make an educated decision.
good luck too all
Will Some Solar Companies Face a Cash Crunch?
now let's check the statement "And the list goes on: YingLi (YGE) lost over $300 million from operating activities in 2007, despite claiming a $52 million accounting earnings gain."
this statement is completly WRONG. cash flow isn't a profit and loss statemnet. if we were to use this method we would have been looking at things the wrong way. a company can have a profit even if the cash flow is negative. this is an accounting issue.
the proper way to say is: YGE used 300m$ (assuming this number is the correct one) in it's operating activities. it didn't lose, it used (or burned or whatever term you choose from the accounting lingo).
regarding the future needs for investing activities, there's no doubt money will need to be raised if growth will stay at the current levels.
regarding the accuracy of the statements i can't comment.
regarding the type of contracts there is a problem as the customers can turn down the order as it's take or pay contracts. so for a given fine (or no fine at all if the contracts are not take or pay, but subject to price nagotiations) they can turn it down.
so no doubt we have lot of risks in the sector (many of them aren't even mentioned here), but what does it all say?
for new industries, over the centuries, we can see the same pattern - new companies burn money in the early stages. they give good credir terms to the customers, they build higher inventories, they buy lots of equipment and employ more workers... at some stage things turn and if they don't some of the companies go bust. still, the fact that the cash flow is negative doesn't mean much here. if we have a retailer that has big cash deficits it's a big red sign, but in this sector it's natural and thinking that a company can be in this industry for a short time and have great positive cash flows (operating or free) is kind of misunderstanding the issue.
so the bottom line is simple - there are risks, because of these risks there is a possibilty for high rewards, if someone checks the reports of a company and thinks that the risk is too high than stay out. but do it for the right reasons. if you think the credit crunch will get worst than we must stay away from some of the companies since they might not be able to raise money or the dilution will be too big.
Selling Some Yingli and Trina Solar on Dead Cat Bounce
after that being said, i want to say "good call" for mark.
but being serious there is a good lesson here. at this juncture mark had the best results as he was playing his system (technical, if i understood correctly). on the other hand there were times that the buy and hold people had better results, all in a given time frame.
we can say that there is no system that will give the best results for any given time frame. so WHAT IS THE SECRET?
we want a system that will control our losses. in other words we want to control our risk.
for those that traded long enough it's easy to understand. this is the one thing that every great trader has in common with his peers. they manage the risk well.
if mark's system is telling him that the trend has become bearish and risk is high at this point, he uses his system and gets out. he might miss big profits if he's wrong, but he'll avoid big loss, which is 10 times more important. we can live with "missing" big profits, but not with taking big losses.
for mark (and for many others) it's best to have a system that is saying buy at 30-32 sell at 40-41. get out if we go to 28. this is just an example for a system that gives you peace of mind and makes the decisions easy. even as a fundtamentalist an investor should know best entry, best exit, stop loss etc... (when i say best it means according to the system they use, it won't be actual "best").
to answer some of the possible questions regarding jack's system. risk is controled by using very low % of his total funds. even if he will lose 100% of his investment in the risky solar sector it will have relatively low impact on his overall asset portfolio.
so if you people are using all your funds for playing the sector, remember that the risk is high and it may be smarter to diversify into some pther sectors or other investments that will lower the overall risk of the entire portfolio.