Business
China’s Solar Sector Navigates Troubles: Market Rebalancing and Price Bottoming Predicted by Goldman Sachs and Morgan Stanley
China's struggling solar industry could be approaching a pivotal moment. Goldman Sachs predicts that upcoming factory shutdowns may stabilize the market, while Morgan Stanley believes that equipment costs have reached their lowest point.
Chinese solar producers have recently endured a brutal earnings period, yet there are cautious indications that the overwhelming surplus troubling the sector might begin to diminish.
Longi Green Energy Technology and five other top solar companies have collectively incurred losses amounting to US$2 billion in the first six months due to the oversupply resulting from a surge in factory construction over the recent years, which has caused prices to plummet to an all-time low. Some of the less prominent firms have already had to restructure, while 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 probably won't happen until the coming year. Goldman Sachs anticipates a forthcoming surge in factory shutdowns that could help stabilize the market, while Morgan Stanley believes equipment costs have already reached their lowest point.
Longi expressed its intentions to "steer the industry away from the mire of low-cost rivalry" as it elevated the prices of solar wafers last week. Similarly, TCL Zhonghuan Renewable Energy Technology declared that it would hike up the costs of three different wafer varieties, as per a report from Chinese news outlets.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty about whether prices could drop any further, stating that even the most prominent market participants may find it overwhelming. He forecasted a challenging year ahead, possibly extending even longer until the excess capacity is eliminated."
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