A growing number of Chinese solar manufacturers are going into bankruptcy or restructuring on a deepening product glut that has led to a massive price slump.
According to a Bloomberg report, two companies have entered some form of bankruptcy proceedings since the start of this month alone. These are both relatively small sector players, with more limited resources to weather the oversupply storm.
Larger players, on the other hand, have resorted to production suspensions and layoffs, Bloomberg also wrote, citing the strategy of one of the biggest in the industry, Longi Green Energy Technology. Longi, by the way, said it would book a net loss for the first half of the year, signaling even the biggest players are not immune to the effects of the glut. The loss was calculated at a minimum of $660 million.
Smaller solar manufacturers, however, cannot afford to do that. One of the companies that declared bankruptcy after a court ordered it to begin reorganization has been reporting net losses since 2019, the report said.
The Chinese solar manufacturing industry's growth has been fast and furious, turning the country into the dominant player in that field globally. To date, China controls as much as 80% of the global solar panel supply change. However, this has come at a cost and the cost has been a price war to eliminate the weaker market participants and relieve the pressure.
Earlier this month, a Chinese solar industry group called for a concerted effort to consolidate the sector to avoid more financial pain and bankruptcies.
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 last week.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More