Business
China’s Solar Industry Crisis: A Turning Point Ahead? Goldman Sachs and Morgan Stanley Predict Market Rebalancing and Bottomed-Out Equipment Prices
China's struggling solar industry might be approaching a significant shift. Goldman Sachs predicts that upcoming factory shutdowns may restore market equilibrium, while Morgan Stanley believes that equipment costs have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period, yet there are initial indications that the significant oversupply burdening the sector might begin to lessen.
Longi Green Energy Technology, along with five other top solar companies, accrued a total of $2 billion in losses during the first half due to an overproduction crisis caused by rapid factory construction in recent years, resulting in unprecedented low prices. Some of the smaller businesses have already had to restructure, and increasing trade disputes with the US and Europe could potentially jeopardize exports.
The economic hardship seems to be laying the groundwork for a recovery, though a significant bounce back is not expected until the following year. Goldman Sachs anticipates a forthcoming surge of factory shutdowns that could aid in stabilizing the market, while Morgan Stanley believes that equipment costs have now reached their lowest point.
Longi expressed its aim to steer the industry away from the rut of cutthroat pricing competition when it announced a hike in solar wafer prices last week. Similarly, TCL Zhonghuan Renewable Energy Technology confirmed its plans to raise the prices of three kinds of wafers, as reported by Chinese press.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty about whether prices could drop any further, saying it could be overwhelming even for the largest market participants. He also predicted a challenging year ahead, if not longer, before the excess capacity is dealt with."
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