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Some Interesting News About The Renewable Energy Development In China - Weekly Selection(5/20)

|Includes: ENS, JKS, Exide Technologies (XIDEQ)

Key Highlights:

  • Chinese lead-acid battery market is not optimistic, and the April sales was worse than expected.
  • A survey of 25 executives in auto industry reveals that Hybrid Electric Vehicles are the most agreeable solution in China.
  • JinkoSolar(NYSE:JKS) is reportedly doing well relatively in the slumping PV industry.
  • Japan's Mitsubishi Chemical is making progress to produce lithium battery anode material in China.
  • Honda began to transfer its Hybrid Vehicle technology to its Chinese joint venture in order to competing with European and American auto manufacturers in the world's largest auto market.

Some Details:

Lead-acid battery market outlook is not optimistic

05/11/2012 ( - It is reported that majority of companies producing motive power batteries and SLI (Starting, Lighting & Ignition) batteries said their April sales were worse than the prior month, while most stationary battery makers kept their April sales steady.

Motive power battery makers blamed the weak downstream demand at the time when the whole industry has been digesting inventory. Tianneng Group (0819.HK) and Chaowei Power (0951.HK) dropped their price by 10-15%, having caused the small and medium companies to sell near their costs or profitless if considering the later maintenance fee. The month of April used to be an off-season for motive power battery, but this year the off-season came one month earlier, and the situation was even worse than the other years in the past.

Survey: Most executives of auto industry support Hybrid Electric Vehicle

A survey to 25 top executives of auto companies was conducted during 2012 Beijing International Automotive Exhibition. As for the question "Which new energy technology for automobile applications is most suitable to the current condition in China", 57% of the respondents supported Hybrid Electric Vehicle(NASDAQ:HEV) and 25% agreed on Plug-in HEV, while only 14% of the executives in the survey showed interest in All-electric Vehicle.

JinkoSolar outplayed other Chinese solar companies on the rat race

9 of 11 Chinese solar companies listed in the US stock market lost money in 2011, but this has not slowed down the rat race in the industry.

The information available to the public indicates that Suntech (NYSE:STP) had $1 billion net loss in 2011; LDK Solar(NYSE:LDK), Yingli Green Energy(NYSE:YGE), Canadian Solar (NASDAQ:CSIQ), JA Solar (NASDAQ:JASO) and Trina Solar (NYSE:TSL) were all in red with net loss of $655.5 million, $509.8 million, $90.9 million, $68.3 million $37.8 million respectively in the same period.

"Though the price has already been cut down to the bone, we are still competing viciously, this is really not a good move for the tier-one companies in the industry." said JinkoSolar(JKS) Vice president Shishang Lin.

The best performer among the 11 companies, JinkoSolar had 2011 net profit of $ 43.4 million , and non-GAAP net earnings of $ 700,000 during the global depression of the PV industry.

The great depression of the PV industry occurred as the rapid expansion of the production capacity led to price drop dramatically; in 2008, the polysilicon price was close to $ 500 / kg, and now it has dropped to $21-$28 / kg.

"But the global overcapacity was misunderstood in a way that everybody had assumed the 2011 global capacity of 30GW and the market demand of 20GW, in fact, the total capacity of first-tier suppliers was only a dozen GW. The small suppliers with an annual output of 800MW or 300MW, counted as larger part of the global capacity, were in a rat race which would drive most of those no-brand, no-scale small firms to shut down their businesses, and the tier-one suppliers really should have not be involved in this competition." said Shishang Lin.

JinkoSolar did not follow suit in 2010 to make quick money, obviously had no intention to participate in vicious competition. "We never want to be the largest and the fastest, but we tended to keep our market focus on improving our brand name and maintaining the balance between production and sales, this is the primary reason we have been able to honor our contracts on time and build up our customer base for the past six years." said JinkoSolar CEO Kangping Chen.

While LDK Solar's debt was up to $ 6 billion, JinkoSolar was able to promote its brand name with a big move. On May 15, JinkoSolar signed the Spanish Valencia football club, providing about 100 million yuan to sponsor the 2012-2014 seasons. "Though it is really a money-burning thing, it will help promote our name brand significantly", said Shishang Lin.

JinkoSolar also launched the second generation of its component products on May 15, and signed the country's largest single photovoltaic power plant project - power plant in Gansu Heihe. "When the majority of solar companies were still chasing the foreign market, we had shifted our focus to the domestic market; our decision was right, because the international market was hit by a severe recession last year during which we had make some impacts on the large scale power plant market with our great efforts. "said Kangping Chen.

Though JinkoSolar is tight-lipped, its partner Xingjie Zhu, chairman of Gansu Heihe Hydropower Development Co. told reporter that this is a project with a total investment of more than 500 million yuan, and "both sides agree to use the EPC (Engineer-Procure -Construct ) model of cooperation, procure components over 300 million yuan with the remaining balance actually belonging to JinkoSolar."

The question now is whether or not the rat race will cause trouble in the domestic market as it did in the international market. At least, the government policy and guideline don't show any optimistic trend. On May 3, Ministry of Finance, Ministry of Science and Technology, and National Energy Bureau jointly issued a notice that would once again reduce the subsidy for the consumers of PV power generation. and set the new subsidy standard to be 5.5 yuan / watt.

Mitsubishi Chemical lays a foundation for battery anode materials production in China

05/17/2012 ( - Mitsubishi Chemical (TYO: 4188) made new progress for its initiatives of producing anode materials in its two factories built one after another in Pingdu of Shandong province.

It is reported that Qingtao Anode Kasei Co., Ltd (QAK), wholly-owned by Japan's Mitsubishi Chemical, planned to build eight production lines. The phase one project with a total investment of 260 million yuan and an registered capital of 92.3 million yuan, broke ground on a construction site of 22,000 square meters at the end of December 2010, was put into operation in March 2012 on the four newly installed production lines having a capacity of 10,000 tons of lithium battery anode material for potential sales of 700 million yuan and increasing the added value of flake graphite materials and spherical graphite materials by 640 million yuan and 450 million yuan respectively. Upon completion of all eight production lines , the annual output of lithium battery anode material will be more than 30,000 tons with potential sales of 2 billion yuan; and the added value of flake graphite materials and spherical graphite material will be up to 1.9 billion yuan and 1.35 billion yuan respectively. This will become the world's largest lithium battery anode material production base, leading the world in the performance of the lithium battery anode material.

The second factory, built by a joint venture with Meiwa Co. and Qingdao Taida Tianrun Carbon Materials Co., Ltd., is principally engaged in the raw material production for lithium battery anode material. It is said that the phase one project with a total investment of $9.2445 million and an registered capital of $ 4.6223 million was completed at the end of April 2011, producing 2000 tons of the raw material for potential sales of 58 million yuan. The phase two is expected to be put into operation in 2013.

Honda will provide China its hybrid vehicle (HV) technology

In addition to its joint venture with Dongfeng Motor, Honda also considers the technology transfer to other car manufacturers. Honda hopes to spread its hybrid vehicles in the world's largest auto market by encouraging the Chinese auto manufacturers to get into the hybrid business. As the world's largest energy consumer, China has launched related programs to popularize environmentally friendly vehicles. By leveraging its HV technology, Honda tries to challenge the European and American manufacturers who are the frontrunners in the Chinese auto market.