Business
China’s Solar Sector Sees Potential Recovery: Goldman Sachs Predicts Factory Closures and Morgan Stanley Indicates Bottomed-out Equipment Prices
China's struggling solar industry could be approaching a pivotal moment. Goldman Sachs anticipates that upcoming factory shutdowns could restore balance in the market, while Morgan Stanley believes that equipment costs have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period, yet there are cautious indications that the severe oversupply affecting the sector might begin to lessen.
Longi Green Energy Technology, along with five other top solar companies, have accumulated a total loss of US$2 billion in the first half due to an oversupply caused by a rapid increase in factory construction in recent years. This has resulted in record low prices. Several smaller firms have already had to restructure as a result, and growing trade conflicts with the US and Europe could jeopardize their export business.
The monetary distress seems to be laying the groundwork for a recovery, however, a significant bounce back is not expected until the coming year. Goldman Sachs anticipates a forthcoming surge of manufacturing shutdowns that could aid in restoring market equilibrium, while Morgan Stanley believes that machinery costs have already reached their lowest point.
Longi expressed its intentions to "help the industry escape the rut of competing on low prices" as it hiked up the prices of solar wafers last week. Similarly, TCL Zhonghuan Renewable Energy Technology announced plans to raise prices for three different wafer types, as reported by Chinese news outlets.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty over whether prices could decrease any further, stating that it could be a significant burden even for major participants. He anticipates a challenging year ahead, possibly extending even longer until the excess capacity is eliminated."
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