Business
China’s Solar Sector Crisis: A Potential Turnaround Signaled by Market Rebalancing and Bottomed-Out Equipment Prices
The struggling solar industry in China might be approaching a significant shift. Goldman Sachs predicts forthcoming plant shutdowns will recalibrate the market, while Morgan Stanley believes that the cost of equipment has reached its lowest point.
Chinese solar producers have recently experienced a brutal earnings period, but there are slight indications that the huge surplus troubling the sector might begin to lessen.
Longi Green Energy Technology, along with five other major solar companies, reported a collective loss of $2 billion in the first six months due to market oversaturation from rampant factory construction in recent years. This oversupply has led to historically low prices. Several minor companies have already had to reorganize, while increasing trade disputes with the US and Europe could potentially threaten export business.
The current financial struggles appear to be setting the stage for a recovery, although a substantial bounce back probably won't happen until next 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 reached their lowest point.
Longi expressed its desire to "help the industry escape the trap of aggressive price competition" as it increased the prices of solar wafers last week. TCL Zhonghuan Renewable Energy Technology also announced that it plans to raise the prices of three different wafer varieties, based on a report from Chinese news outlets.
"Even the most prominent figures may find it hard to predict if costs can decline any further," shared Cosimo Ries, a researcher at Trivium China based in Shanghai. "We're potentially looking at a tough year ahead, perhaps even more, until that surplus is dealt with."
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