Business
Rebalancing the Market: China’s Solar Sector Nears Turning Point Amid Factory Closures and Bottomed-Out Equipment Prices
China's struggling solar industry might be approaching a crucial juncture. Goldman Sachs anticipates that upcoming factory shutdowns will restore market equilibrium, while Morgan Stanley believes that equipment prices have reached their lowest point.
Chinese solar producers have recently endured a brutal earnings period, yet there are early indications that the enormous surplus, which is currently troubling the sector, may begin to alleviate.
Longi Green Energy Technology, along with five other top solar companies, reported a total loss of US$2 billion in the first half due to a surge in factory construction in previous years which led to an overproduction problem, pushing prices to an all-time low. Several smaller firms have already had to restructure as a result, and with escalating trade conflicts with the US and Europe, exports could be jeopardized.
The economic distress seems to be laying the groundwork for a recovery, though a significant bounce back probably won't happen until the following year. Goldman Sachs anticipates a forthcoming surge of manufacturing shutdowns that could help restore equilibrium in the market, whereas Morgan Stanley believes machinery costs may have already reached their lowest point.
Longi expressed its desire to "propel the industry beyond the mire of cutthroat pricing competition" when it escalated the cost of solar wafers last week. TCL Zhonghuan Renewable Energy Technology also announced that it plans to hike up the prices of three different kinds of wafers, as reported by Chinese media outlets.
"Cosimo Ries, an analyst at Trivium China in Shanghai, expressed uncertainty about whether prices could decrease any further, stating it might be too significant even for the major players. He suggested that the upcoming year could still be difficult, and it might take a while for the capacity to be sorted out."
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