REC Silicon Plunges 29% as Sales Fall Amid Polysilicon Trade War

  • China choked off imports of U.S. polysilicon after dispute
  • `Very difficult to find new customers' Carnegie analyst says

REC Silicon ASA’s shares plummeted 29 percent as the maker of polysilicon reported falling sales volumes due to a protracted trade war between China and the U.S.

The company said it lost almost $30 million before interest, tax, depreciation and amortization in the fourth quarter. It also curbed some production for five months. Its stock traded as low as 0.81 Norwegian kroner and was recently at 0.82 kroner at 11:24 a.m. in Oslo, falling from 1.14 at the last close. The company is based in Moses Lake, Washington, and listed in Norway, the legacy of its past ownership by Renewable Energy Corp ASA of Norway.

“They are basically saying we don’t have any business,” said Preben Rasch-Olsen, energy analyst at Carnegie ASA in Norway. “REC Silicon had most of their sales in to China and are now locked out of that market. It’s been very difficult to find new customers outside of China which is why they are delivering weak results and shutting down production for months, hoping to see a solution to this trade war.”

The U.S. imposed steep import duties on Chinese solar modules in 2012, prompting a retaliation with U.S.-made polysilicon. About 70 to 80 percent of solar module factories are in China, according to Rasch-Olsen. A resolution is unlikely in the short term and China is the main benefactor of the arrangement, he said.

“China is making more money by not having cheap U.S. polysilicon in their market than what they would make if they had more access to the U.S. module market,” he said. He has a hold recommendation on the stock.

REC’s revenue fell 14 percent to $75 million from $87.5 million in the third quarter.

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