Business
China’s Solar Sector on the Edge: Factory Closures, Market Rebalance and the Hope for a Turnaround Amid Record Lows
China's struggling solar industry could be approaching a pivotal moment. Goldman Sachs anticipates that forthcoming 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 season, however, there are subtle indications that the enormous surplus problem troubling the sector might be beginning to lessen.
Longi Green Energy Technology, along with five other major solar companies, incurred a collective loss of $2 billion in the first six months. This loss stemmed from an overproduction crisis brought about by the rapid construction of factories in recent years, causing prices to plummet to unprecedented levels. Some minor firms have already had to revamp their operations, and the escalating trade disputes with the US and Europe could jeopardize their export business.
It seems that the current financial distress may be setting the stage for a recovery, though a significant bounce back is not expected until the following year. Goldman Sachs anticipates a forthcoming surge in factory shutdowns that could aid in stabilizing the market, whereas Morgan Stanley believes that equipment costs have reached their lowest point.
Longi expressed its ambition to steer the industry away from a rut of cutthroat pricing competition when it increased the prices of solar wafers last week. TCL Zhonghuan Renewable Energy Technology has also announced it will hike the prices of three wafer varieties, as per a report from Chinese press.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty over whether prices could drop further, stating it could be a significant challenge even for the largest market participants. He anticipates a tough year ahead, perhaps even longer, before the overcapacity issue is resolved."
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