Chinese Solar Group Urges Faster Consolidation as Glut Deepens
(Bloomberg) -- China should push struggling solar manufacturers to exit the market as soon as possible to reduce severe overcapacity in a sector that’s vital to the energy transition, according to a major industry group.
Central and local government, financial institutions, and companies should coordinate to speed up industry consolidation, Wang Bohua, head of the China Photovoltaic Industry Association, said at a solar conference in Zhejiang province on Thursday.
The country’s world-leading solar industry is grappling with factory overcapacity that’s spurred a deepening glut in generation equipment and an ensuing price war. Longi Green Energy Technology Co. and Tongwei Co. — two of the biggest manufacturers — lost more than $1 billion in the first half amid a glut that’s expected to hit smaller firms harder.
Chinese solar installations are still forecast to be fairly high this year, despite the glut. The CPIA said Thursday that it was expecting 190 to 220 gigawatts of new capacity in China this year, unchanged from a forecast in February. That compares with a record 217 gigawatts in 2023. Globally, the association predicted 390 to 430 gigawatts of installations this year.
Solar firms in China are facing terrible cash flows and are even delaying loan payments and order deliveries, Wang said at the conference in Wenzhou. Polysilicon manufacturers and module makers are only operating at about 50% to 60% of full capacity, he said.
The poor financial situations of some of the solar companies is also endangering product quality, Wang said, adding that the “immediate agony” of a speedy industry consolidation was better than a long and drawn-out process.
Financial institutions should avoid providing funding to companies that are expected to fail, while manufacturers should be cautious when investing in new capacity and consider buying plants that are set to be abandoned by outside investors, Wang said.
Authorities and financial institutions should support solar-sector takeovers and mergers to avoid resources being wasted, Gao Jifan, chairman of leading manufacturer Trina Solar Co., said on the sidelines of the conference on Wednesday.
On the Wire
The People’s Bank of China unexpectedly lowered the rate on its one-year policy loans by the most since April 2020 days after cutting a key short-term rate, in a sign of greater support for the slowing economy.
Economists narrowly predict that Chinese banks will cut their benchmark lending rates again in the fourth quarter, as pressure on the yuan to depreciate constrains policymakers.
Typhoon Gaemi took aim at China after tearing across the Philippines and Taiwan, where it knocked out power to hundreds of thousands of homes, flooded streets and left at least 24 people dead.
This Week’s Diary
Thursday, July 25
- Nothing major scheduled
Friday, July 26
- China Gold Congress and Expo, Shanghai, day 1
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
Saturday, July 27
- China Gold Congress & Expo in Shanghai, day 2
- China industrial profits for June, 09:30
Sunday, July 28
- China gold Congress & Expo in Shanghai, day 3
©2024 Bloomberg L.P.
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