Solar power equipment and parts will remain in major global oversupply and product prices will continue to be under downward pressure for at least another year, according to the chief of the world's largest maker of solar panels.
Shi Zhengrong, chairman of Suntech Power Holdings, said the Chinese government should consider asking banks to relax lending to companies in the solar industry, many of whom are reporting widespread losses, tight cash-flows and rising interest expenses.
'It is difficult to say when oversupply will be corrected. I'd say it will take at least 12 months,' Shi said on Tuesday on the sidelines of the SNEC International Solar Industry and Photovoltaic Exhibition & Conference. 'I don't see any sign of a product price rebound.'
New York-listed Suntech, which is based in Wuxi, Jiangsu province, reported a net loss of US$1 billion for last year in March, compared to US$237.9 million profit in 2010, as product prices fell faster than costs were reduced.
Declining sales due to lower subsidies in the main market for solar - Western Europe - were more than offset by growth in other markets, led by the United States and China. But sharply lower panel prices due to intense competition cut profitability markedly.
The global solar power panel manufacturing capacity is around 70 gigawatts a year, of which 50 GW comes from China, according to Li Junfeng, deputy secretary-general of the Chinese Renewable Energy Industries Association. Last year global panel installations amounted to only 27 GW.
But Li does not have much sympathy for solar panel manufacturers.