595 replies to this topic

[JulyWebb]

Scsnospam, Odyd added RGSE to the list of Solar's on the side.

[odyd]

odyd, did you buy RGSE stock to your portfolio?

no

[sunnysky]

Commercial solar hits grid parity in Germany, Italy, and Spain

http://www.businessg...taly-and-spain?

[sunnysky]

First Solar could outshine Chinese rivals with new technology

http://www.theglobea...rticle17595433/

 

Does the author think TSL and JKS will stand still in all these years?

 

 

First Solar now forecasts that its manufacturing costs will roughly equal those of Trina and other competitors by the end of 2014 and will be 14 per cent less by 2017. Much of the savings seem to come from implementation of intellectual property that First Solar bought from General Electric in 2013 in exchange for a nearly 2-per-cent stake in the company.

[sunnysky]

Some time ago I asked about potential currency effects on C7 performance, but didnt get any responses. What is the general consensus on the effect of a stronger USD against RMB and Yen etc?

 

Although not a single pair of currencies are at play for any of the CN7 companies, all should benefit when RMB depreciates against the currencies of the countries they export to. Some other exchange rates could also affect some players, but to a lesser degree for most I believe. CSIQ is sensitive also to CAD/YEN and CAD/USD so their situation is more complicated than the rest.

[Xeloris]

Sunny,  I questioned the same thing,   Although exports may increase with weaker RMB they would make less USD$$ after the FX... does this become a wash then if exports increase?.. and if we are dealing with tariff and caps on exports (like EU deal) does this then hurt, since they are capped on exports to some countries?

[odyd]

Although exports may increase with weaker RMB they would make less USD$$

And how did you come up with that? Do they globally sell in RMB? They sell in every currency, but RMB, this would actually create more RMB and less processing cost as salary is fixed, and contracts in China are fixed. On the other hand, anything bought in dollars would cost more RMB.

The fear always was that RMB was worth more than it was traded with the US dollar. This means costs which are RMB made, would increase COGS.  a weaker RMB means cheaper labor  first. This means COGS is going down.

[odyd]

In fact from the perspective of accounting something purchase in $ remains at the same price in $ after first exchange than second exchange to be entered on the balance sheets.

Let's pray RMB does not appreciate as GM will shrink.

[explo]

Weak cost and debt currency is good. These guys have been struggling with a strong RMB. The RMB weaking the past two months should be very positive for the exports profitability for our CN11s.

[Xeloris]

Ok thanks for clarifying that, bad math in my head

[pgo]

Wouldn't they show weakened margins for local market sales when converting into $? If so, this could offset some gains from exports.

[eysteinh]

PGO as explo tried to point out any weakening of currency would not only affect market sales (btw we do not even know what currency hedges they have) it would also reduce costs in production so we should see stronger margins. Just to give an example: If currency fluctuation allows my modules to be produced at 5% less cost and I sell them with 5% less price in 50% of the market while in my home market same price I still overall gain from this. On top of this you got loans in rmb and interest rates etc that now are less in dollar cost so I would say the overall costs going down far outweights any asp loss in overseas market. It could be different if say you where 90% selling to an overseas market, but most tier 1 chinese players are not doing this currently. 

[odyd]

Wouldn't they show weakened margins for local market sales when converting into $? If so, this could offset some gains from exports.

It would pgo if price remained constant in RMB and not reflective depreciation. The scenario that price would remain $0.61 after RMB deperciation would command more RMB for it. So there would not be an impact, In general terms when currency devalues exports become cheaper imports becomes more expensive.

[odyd]

Wouldn't they show weakened margins for local market sales when converting into $? If so, this could offset some gains from exports.

There is a risk of course that pricing in China is separated from global prices. It is obvious that prices are lower, but there is a rational why they are lower. This rational may continue to apply and keep the same low price. In this case product sold in China would have the same margin, but revenue stream would be lower when exchanged into the US currency. So operationally no impact but revenue would be less, preserving GM, your observation makes sense. 

[sunnysky]

Thanks for all the arguments but the math is actually quite simple. Lets say your cost is y YMB, you sell in US for u USD, you sell in Japan for j JPY, and your account currency is USD. 

 

(1) Your gross margin for US sale is then:

 

(u * USDYMB - y)  measured in YMB, which increases when YMB weakens (USDYMB becomes bigger) since you sell for more,

 

and 

 

(u * USDYMB - y) / USDYMB measured in USD = (u - y / USDYMB), which also increases when YMB depreciates since the cost is lower.

 

 

(2) Your gross margin for Japan sale is then:

 

(j * JPYYMB - y) measured in YMB, which increases when YMB weakens (JPYYMB becomes bigger), 

 

and

 

(j * JPYYMB - y) / USDYMB measured in USD = (j *JPYUSD - y / USDYMB), which also increases when YMB weakens and JPY appreciates against USD, remains stable, or depreciates to the lesser extent as compared with YMB against the dollar because the cost is reduced but the selling price is higher, stable, or decreases less than the cost, all mesured in USD terms. 

[sunnysky]

So based on the above argument, when the domestic currency depreciates you can afford to lower your selling price for exports a little bit without sacrificing profit. That is why your products become more competitive in foreign markets and export volume increases.

[Norse]

Ukraine now ask Europe to provide them gas as they not want to be dependent on Russia. Ukraine is also a great country for Solar with great incentives, so hopefully we will see some development here. They are not a part of the EU, but we expect them to get big loans from IMF which could help them invest for the future.

http://en.m.wikipedi...ower_in_Ukraine


(Old article)
http://m.pv-magazine...tors_100012355/

[spiritcraft]

Ukraine now ask Europe to provide them gas as they not want to be dependent on Russia. Ukraine is also a great country for Solar with great incentives, so hopefully we will see some development here. They are not a part of the EU, but we expect them to get big loans from IMF which could help them invest for the future.

http://en.m.wikipedi...ower_in_Ukraine


(Old article)
http://m.pv-magazine...tors_100012355/

That is a nice map.  I would never have expected that level of insolation. 

[Scsnospam]

How would the math work for china sales, considering large volume of domestic sales?

 

Lets say in RMB nothing changed ie COGS and ASP stayed the same, a cheaper RMB would translate to lower GM in dollar terms, linear with the depreciation in currency. So GM for china sales should come down. GM for export sales goes up. If china sales < 50% you win, if >50%, then you lose. Is that correct?

[Jetmoney]

Thanks for all the arguments but the math is actually quite simple. Lets say your cost is y YMB, you sell in US for u USD, you sell in Japan for j JPY, and your account currency is USD. 
 
(1) Your gross margin for US sale is then:
 
(u * USDYMB - y)  measured in YMB, which increases when YMB weakens (USDYMB becomes bigger) since you sell for more,
 
and 
 
(u * USDYMB - y) / USDYMB measured in USD = (u - y / USDYMB), which also increases when YMB depreciates since the cost is lower.
 
 
(2) Your gross margin for Japan sale is then:
 
(j * JPYYMB - y) measured in YMB, which increases when YMB weakens (JPYYMB becomes bigger), 
 
and
 
(j * JPYYMB - y) / USDYMB measured in USD = (j *JPYUSD - y / USDYMB), which also increases when YMB weakens and JPY appreciates against USD, remains stable, or depreciates to the lesser extent as compared with YMB against the dollar because the cost is reduced but the selling price is higher, stable, or decreases less than the cost, all mesured in USD terms.

Nice demonstration!

However, if you go one step further and let's say you sell in China is R, gross profit in China in US dollars will be (R-y)/USDRMB. So, if USDRMB increases, your gross profit selling in China in USD should decrease unless you can sell at higher price in china