Business
China’s Solar Sector Crisis: A Turnaround in Sight? – A Market Analysis by Goldman Sachs and Morgan Stanley
China's struggling solar industry could be approaching a significant shift. Goldman Sachs anticipates forthcoming factory shutdowns will stabilize the market, while Morgan Stanley believes the prices of equipment have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period, yet there are subtle indications that the enormous oversupply troubling the sector might begin to lessen.
Longi Green Energy Technology, along with five other top solar companies, accumulated losses of up to $2 billion in the first half due to an oversupply caused by a rush of factory construction in previous years. This has led to unprecedented low prices. Several smaller firms have already had to restructure, and increasing trade conflicts with the US and Europe could endanger exports.
The economic hardship appears to be paving the way for a revival, though a significant recovery probably won't happen until next year. Goldman Sachs anticipates a forthcoming surge of factory shut-downs that could help stabilize the market, while Morgan Stanley believes that equipment costs have already hit their lowest point.
Longi expressed its intention to "steer the industry away from the pitfall of cutthroat pricing" as it heightened the cost of solar wafers last week. In addition, TCL Zhonghuan Renewable Energy Technology declared that it would mark up the prices for three different wafer types, as per a Chinese media report.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty about whether prices could drop further, stating that it would be too extreme even for the largest competitors. He predicted a challenging year ahead, with the possibility of it taking even longer for the capacity to be balanced."
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