Business
China’s Solar Sector Nears Turning Point: A Glimmer of Hope Amidst Factory Closures and Price Plunge
China's struggling solar industry could be approaching a critical juncture. Goldman Sachs anticipates that impending factory shutdowns could restore balance to the market. Meanwhile, Morgan Stanley believes that equipment costs have hit their lowest point.
Chinese solar producers have recently endured a brutal earnings season. However, initial indicators suggest the enormous surplus troubling the sector might begin to lessen.
Longi Green Energy Technology, along with five other top solar companies, incurred a collective loss of $2 billion in the first half due to the rapid construction of excessive factories over the recent years. This overproduction has led to a significant drop in prices. Some of the smaller firms have already begun restructuring as a result, while increasing trade conflicts with the US and Europe could potentially jeopardize exports.
The economic hardship appears to be setting the stage for a recovery, even though a significant bounce back isn't expected until the following year. Goldman Sachs anticipates a forthcoming surge of manufacturing shutdowns that would aid in re-stabilizing the market, while Morgan Stanley believes that equipment costs have already reached their lowest point.
Longi expressed its aspiration to "steer the sector away from a rut of cutthroat pricing competition" when it boosted the prices of solar wafers last week. TCL Zhonghuan Renewable Energy Technology also announced its plans to raise the prices for three different kinds of wafers, as reported by Chinese news outlets.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty over whether prices can drop any further, suggesting it might be too great a burden for even the most significant players. He also predicted a potentially difficult year ahead, or maybe more, until the excess capacity is addressed."
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