Business
China’s Solar Industry Crisis: A Turning Point in Sight as Goldman Sachs Predicts Market Rebalance and Morgan Stanley Signals Bottomed-out Equipment Prices
China's struggling solar industry could be approaching a critical juncture. Goldman Sachs anticipates that forthcoming plant shutdowns will restore equilibrium in the market, whereas Morgan Stanley believes that the costs of equipment have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period, however, there are initial indications that the enormous surplus troubling the sector might begin to lessen.
Longi Green Energy Technology, along with five other top solar companies, accumulated losses of approximately $2 billion in the first six months. This is due to an overproduction resulting from rapid factory construction in recent years, which has subsequently led to historically low prices. Some smaller firms have already had to restructure as a result. Additionally, increasing trade conflicts with the US and Europe could potentially jeopardize exports.
The economic hardship appears to set the stage for a recovery, but a significant bounce back isn't expected until next year. Goldman Sachs predicts a forthcoming series of factory shutdowns that would assist in stabilizing the market, whereas Morgan Stanley believes that equipment prices have already hit their lowest point.
Longi expressed its intentions to "steer the industry away from the rut of low price rivalry" as it hiked the prices of solar wafers last week. In line with this, TCL Zhonghuan Renewable Energy Technology has also announced plans to raise the prices of three different wafer types, as per a publication in the Chinese press.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty about whether prices could drop any further, saying it could be too significant even for the major participants. He predicted a tough year ahead, possibly extending beyond that, before the surplus capacity is dealt with."
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