China’s Solar Industry Calls for Consolidation to Cope With Overcapacity 

China urgently needs consolidation in the solar manufacturing industry as overcapacity and price wars are leading local companies to a race to the bottom, a major industry group said on Thursday.

Chinese solar companies, local and central governments, and financial institutions need to work together toward faster consolidation in the sector, in which many smaller firms are currently struggling, Wang Bohua, head of the China Photovoltaic Industry Association, said at a solar conference on Thursday, as carried by Bloomberg.

The large companies haven’t been spared from the glut and price wars, either.

Earlier this month, Longi Green Energy Technology, one of the world’s top solar panel manufacturers, warned it would book a loss for the first half of 2024, amid a fierce price war and overcapacity in the sector. Longi Green expects at least $660 million in losses for the first half, following that a “mismatch” of supply and demand that has crushed prices for its leading products.

Other major solar manufacturers, including Tongwei and Aiko Solar, also expect to report losses for the first half of the year.

Earlier this year, Fitch Ratings warned that “Low pricing along the solar photovoltaic (PV) manufacturing supply chain and continued aggressive industry capacity expansion may result in lower profitability into at least 2025,” when it revised down Tongwei’s outlook to Negative from Stable.

The situation among smaller solar equipment manufacturers is even more alarming.

The booming solar panel manufacturing in China has led to losses for the major producers who have been forced to sell their products at below-market prices. The Chinese boom, supported by cheap materials and policy support from the central and local governments, has started to bite into the profitability of manufacturers.

The Chinese solar panel market remains oversupplied and this glut could last up to two more years, according to Longi Green Energy Technology.

By Tsvetana Paraskova for Oilprice.com

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