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Solar industry outlook still bleak despite recent rally

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Borneo Post ---- Solar stocks kicked off 2013 with a sharp rally, prompted in part by last week’s news that a company controlled by Warren Buffett’s Berkshire Hathaway Inc would pay up to US$2.5 billion for two SunPower solar projects in California.

This week, the stocks retreated after many investors and analysts called the moves overblown, making the Buffett rally look more like a short-term bump.

“The Buffett-SunPower deal is good news … but individual investors should not interpret it as a buying signal for solar stocks,” said Yves Vaneerdewegh, who manages the Luxembourg-based 11 million-euro (US$14.37 million) Quest Cleantech Fund.

He added that the sector’s recovery may take much longer, and that stocks could tumble dramatically once again.

The rally, which started in November as China signalled willingness to prop up its ailing solar sector, was bolstered last week by the resolution of the US “fiscal cliff” as well as a slight uptick in the price of polysilicon, the key raw material in photovoltaic solar panels.

J.P. Morgan analyst Christopher Blansett said in a research note on Monday that viewing SunPower’s deal with Buffett’s MidAmerican as a positive development for the whole industry “doesn’t make any sense …  no other solar PV company will benefit from this sale.

” He advised clients that now was “a good time to take short positions” in solar stocks.

The MAC Global Solar Energy index climbed 17.5 per cent in the first three trading days of the year, but has since slipped 2.5 per cent.

SunPower shares soared 55 per cent last week, but have retrenched eight per cent since then.

Diminishing government support in the world’s top solar market, Europe, and a massive oversupply of panels that sent selling prices into a tailspin have slammed the solar manufacturing industry in the last two years.

The industry crisis has forced many players to file for insolvency, notably former sector leaders Q-Cells and Solon SE in Germany.

By the end of 2012, there were fewer than 150 global solar module and cell companies, down from more than 750 in 2010, research firm IHS said, adding that 2013 would see further consolidation.

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