Solar Stocks Surge on Speculation of Rising China Panel Demand

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By Justin Doom - Feb 9, 2012 7:00 PM ET

Solar stocks yesterday gained the most in a month on speculation that demand for panels will increase in China.

The Bloomberg Global Leaders Solar Index (BLGS) of 37 companies jumped 4.6 percent to $54.82 at the close in New York, the most since Jan. 11, helped by gains at Chinese manufacturers.

Yingli Green Energy Holding Co. (YGE) rose 20 percent, Trina Solar Ltd. (TSL) increased 19 percent and LDK Solar Co. (LDK) advanced 13 percent.

The rally may have been sparked by Renewable Energy Corp. ASA (REC), a Norwegian producer of polysilicon, which reported higher- than-estimated fourth-quarter sales, Pavel Molchanov, an analyst for Raymond James & Associates Inc. in Houston, said by e-mail.

Renewable Energy told analysts during a Feb. 8 conference call that there was “a marked pickup in demand,” in the fourth quarter.

That increase, especially in China, “sucks up some of the excess supply,” Molchanov said yesterday. “Hence, Chinese producers are seeing a much bigger rally than the others.” Polysilicon is the main raw material in solar cells and rising demand is a leading indicator of a solar surge.

First Solar Inc. (FSLR), based in Tempe, Arizona, rose 7 percent yesterday and MEMC Electronic Materials Co., a St. Peters, Missouri-based maker of polysilicon, increased 8 percent.

Investors covering short sales drove up share prices yesterday, said Jesse Pichel, an analyst with Jefferies Group Inc. in New York, who said forecasts of rising demand were “inaccurate.”

Cold weather and anticipated cuts to subsidies in Germany, the top solar market, are hindering solar installations, Pichel said in an e-mail yesterday.