Business
China’s Solar Sector on the Brink: Goldman Sachs and Morgan Stanley Predict Market Rebalancing Amid Factory Closures and Bottoming Equipment Prices
China's struggling solar industry could be approaching a significant shift. Goldman Sachs anticipates that forthcoming factory shutdowns will restore balance in the market, whereas Morgan Stanley believes that equipment costs have hit their lowest point.
Chinese solar producers have recently endured a brutal earnings period, yet there are subtle indications that the substantial surplus troubling the sector might be beginning to lessen.
Longi Green Energy Technology, along with five other top solar companies, incurred a collective loss of US$2 billion in the first six months due to overproduction of solar panels in recent years, resulting in a surplus that has pushed prices to an all-time low. Several smaller firms have already had to reorganize as a result, and escalating trade disputes with the US and Europe could jeopardize exports.
The monetary discomfort seems to be laying the groundwork for a recovery, although a significant bounce back is not expected until the following year. Goldman Sachs anticipates an approaching surge of manufacturing shutdowns that would assist in reestablishing market equilibrium, while Morgan Stanley believes that machinery costs have already reached their lowest point.
Longi expressed its desires to "steer the industry away from the rut of cut-throat pricing competition" as it elevated the cost of solar wafers recently. TCL Zhonghuan Renewable Energy Technology also announced its plans to hike the prices for three kinds of wafers, as per the information from a Chinese media report.
"Even the largest entities might find it difficult if prices drop any further, I'm uncertain if it's feasible," commented Cosimo Ries, a market analyst at Trivium China in Shanghai. "The year ahead will likely be tough, with a potential longer period required before the surplus is eliminated."
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