Business
China’s Solar Sector Nears a Turning Point: Financial Turmoil Paves Way for Market Rebalance
The struggling solar industry in China could be approaching a pivotal moment. Goldman Sachs anticipates that upcoming factory shutdowns will restore market balance, while Morgan Stanley believes that equipment costs have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period, however, there are slight indications that the enormous surplus troubling the sector might be beginning to lessen.
Longi Green Energy Technology, along with five other prominent solar companies, accumulated a joint loss of US$2 billion in the first six months due to overproduction. This resulted from a recent surge in factory construction, leading to an oversupply and consequently, the lowest ever prices. Some minor firms have already had to restructure as a result, and escalating trade disputes with the US and Europe could jeopardize exports.
It appears that the economic hardship is paving the way for a revival, even though a substantial recovery may not be seen until the following year. Goldman Sachs anticipates a forthcoming surge of factory shutdowns that could help to stabilize the market, while Morgan Stanley believes that equipment costs have likely reached their lowest point.
Longi expressed its aspiration to help the industry move away from the rut of battling over low prices, as it increased the cost of solar wafers last week. Additionally, TCL Zhonghuan Renewable Energy Technology has announced plans to hike the prices of three different wafer types, as reported by Chinese news outlets.
"Cosimo Ries, an analyst from Trivium China based in Shanghai, expressed uncertainty over whether prices could decrease further, asserting that such a drop would be overwhelming even for major contenders. He predicts a difficult year ahead, and possibly an even longer period before there is a resolution to the current capacity issues."
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