Reining in cutthroat competition, China’s solar sector sees profits return as polysilicon prices surge and losses narrow.
Reining in aggressive competition, China’s solar sector has staged a strong recovery as major polysilicon producers report narrowing losses and a rebound in profitability. Polysilicon prices have surged by 50% since July, following government warnings against cutthroat competition and industry-led efforts to curb excess capacity.
Leading manufacturer Tongwei Co. reported a sharp reduction in third-quarter losses to 315 million yuan ($44 million) from 844 million yuan a year earlier. Meanwhile, GCL Technology Holdings Ltd, the country’s second-largest producer, swung to a 960 million yuan profit after a 1.81 billion yuan loss in the same period last year. The turnaround is being credited to the industry’s “self-discipline” measures, including the creation of a 50-billion-yuan fund to phase out surplus capacity.
Analysts at Citigroup described GCL’s results as a “milestone achievement” for China’s anti-involution campaign, Beijing’s drive to reduce destructive competition in key industries. The bank expects profitability to continue improving in the coming quarter.
Daqo New Energy Corp, another major producer, is set to report results soon, with executives signalling that the industry has “marked a clear bottom.”
Despite the rebound, challenges remain. Solar installations in China are slowing as competition with coal intensifies, and exports face global protectionist pressures. Citigroup believes further government intervention may be forthcoming, though specific measures are yet to be disclosed.
