Business
Rebalancing on the Horizon: China’s Solar Sector Shows Signs of Recovery Amidst Market Turmoil
China's struggling solar industry might be approaching a significant shift. Goldman Sachs anticipates that upcoming factory shutdowns could stabilize the market, while Morgan Stanley believes equipment costs have reached their lowest point.
Chinese solar producers have recently experienced a brutal earnings period. However, there are subtle indications that the enormous surplus troubling the sector might begin to diminish.
Longi Green Energy Technology, along with five other prominent solar companies, accumulated a total loss of US$2 billion in the first six months. This loss was due to a surge in factory construction in recent years, leading to an oversupply and pushing prices to all-time lows. Some minor businesses have already had to reorganize due to this issue. Additionally, escalating trade conflicts with the US and Europe could jeopardize their exports.
The current financial hardship seems to be setting the stage for a recovery, although a significant bounce back probably won't happen until next year. Goldman Sachs anticipates a forthcoming surge of factory shutdowns that would aid in restoring market equilibrium, while Morgan Stanley believes equipment costs have already reached their lowest point.
Longi expressed its intention to "steer the industry away from the mire of cutthroat pricing competition" as it elevated the prices of solar wafers the previous week. TCL Zhonghuan Renewable Energy Technology also announced that it would hike up the prices of three different wafer types, as per a Chinese media report.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed his uncertainty about whether prices can decrease any further, stating that even the most significant market participants might find it overwhelming. He also predicted that the upcoming year could be tough, and it might take even more time to balance the capacity."
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