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OCI Leads Solar Cell Declines on Investment Delay: Seoul Mover

May 21 (Bloomberg) -- OCI Co. led declines among South Korean solar-cell companies following the polysilicon maker’s announcement that it will delay expansion plans.

OCI, South Korea’s biggest maker of polysilicon, the raw material used to make most solar panels, fell 4.4 percent on the Korea Exchange to 194,000 won today, the lowest close since Oct. 6. South Korea’s benchmark Kospi index gained 0.9 percent.

Seoul-based OCI announced on May 18 after the stock market closed that it scrapped plans to build two polysilicon factories at home because Europe’s worsening fiscal crisis is affecting the volatility of the solar-power industry. An update on its investment position will be given within a year, OCI said.

The announcement may slow OCI’s efforts to cut expenses because the new plants are designed to be more cost effective, Nomura analysts, including CW Chung, said in a research note. Nomura has a “reduce” recommendation on OCI.

The price of polysilicon dropped 2.6 percent in the week ended May 7, adding to almost three months of continuous declines, according to Bloomberg New Energy Finance.

Nexolon, South Korea’s biggest maker of silicon ingots and wafers used in solar cells, fell 3.4 percent to 3,670 won, the lowest close since Dec. 28. SKC Solmics Co., a producer of semiconductor machinery parts made from silicon materials, declined 6.8 percent to 4,410 won. Woongjin Energy Co., which makes silicon ingots and wafers, dropped 6 percent to 5,170 won.

To contact the reporter on this story: Sangim Han in Seoul at sihan@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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