China’s world-dominating solar firms have been forced to sell below cost after a breakneck buildup in capacity to feed China’s renewables boom. — Bloomberg
SHANGHAI: China’s top solar manufacturers posted big losses in the third quarter as severe overcapacity and price wars continue to hurt the companies producing equipment critical to global energy transition.
Leading panel-maker Longi Green Energy Technology Co chalked up its fourth straight quarterly net loss of 1.26bil yuan (US$177mil), after recording a profit of 2.5bil yuan in the same period last year.
Rivals Tongwei Co and Trina Solar Co also swung to losses, while JA Solar Technology Co saw net income plunge and Jinko Solar Co barely turned a profit.
Longi blamed a persistent mismatch between supply and demand, which has led to a significant drop in product prices, according to its statement.
The company has reduced its output to ease losses.
China’s world-dominating solar firms have been forced to sell below cost after a breakneck buildup in capacity to feed China’s renewables boom.
Companies are undercutting each other to maintain market share, and most are expected to report losses this year, BloombergNEF said in a report this month.
Consolidation has already seen some smaller players going bankrupt or being bought by larger outfits.
The sharpened focus on the health of a sector deemed increasingly central to China’s economy could hasten measures to improve profitability.
Solar-making shares surged last week on hopes that the government will step in with restrictions on production, although some analysts remained unconvinced.
China’s main solar industry association earlier this month called for rational pricing and urged companies to be more disciplined in bidding for projects.
It said struggling manufacturers should exit the market as soon as possible.
The increased scrutiny could help eliminate capacity and accelerate consolidation, Jinko’s chairman Li Xiande said on an earnings call on Wednesday.
“We believe that, with enhanced supervision by related departments, domestic prices will eventually return to reasonable levels,” Li said.
China’s factory activity unexpectedly expanded after five months of contraction, suggesting recent stimulus efforts may have begun to boost growth momentum.
As the US presidential election nears, investors in Chinese stocks are zeroing in on the prospects of key sectors that look set to remain in the crosshairs of the White House, whoever wins it. — Bloomberg
