Business
China’s Solar Sector Nears Possible Turning Point: Goldman Sachs and Morgan Stanley Predict Market Rebalance and Bottomed-Out Equipment Prices
China's struggling solar industry could be approaching a pivotal moment. Goldman Sachs anticipates that impending factory shutdowns could stabilize the market, 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 initial indications that the enormous surplus troubling the sector may be beginning to diminish.
Longi Green Energy Technology, along with five other top solar companies, accumulated a total of $2 billion in losses in the first six months due to the overproduction of factories built in the recent years, resulting in surplus capacity that has pushed prices to an all-time low. Some of the less established firms have already had to restructure, and increasing trade disputes with the US and Europe could endanger exports.
The economic distress seems to be setting the groundwork for a recovery, but a significant bounce back is not expected until the next year. Goldman Sachs anticipates a forthcoming surge of factory shutdowns that could assist in stabilizing the market. Meanwhile, Morgan Stanley believes that equipment costs have already reached their lowest point.
Longi expressed its intentions to "steer the industry away from a mire of cutthroat pricing" as it hiked the prices of solar wafers last week. In a related development, TCL Zhonghuan Renewable Energy Technology declared it would mark up the prices of three kinds of wafers, as per a report in 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 largest players might find it overwhelming. He also predicted that the coming year would be tough and it may take a while before the excess capacity is dealt with."
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