Solar Industry Braces for Another Challenging Quarter

The solar industry is bracing for another challenging quarter as it grapples with oversupply and low prices, with major manufacturers reporting significant financial losses. Preliminary results from three Chinese manufacturers – Daqo New Energy, JinkoSolar, and LONGi – have shown a downward trend in the fortunes of the solar manufacturing industry over 2024.



Daqo New Energy, a polysilicon producer, reported losses between RMB2.6 billion (US$355.5 million) and RMB3.1 billion (US$424 million) for the financial year 2024, compared to net profits of RMB5.8 billion (US$793 million) in 2023. The company attributed the losses to the overall oversupply in the industry, which drove down polysilicon prices. Daqo has been reducing its polysilicon production and sales volumes to mitigate the impact of low prices.

JinkoSolar, the world's largest solar manufacturer by volume, predicted net income between RMB80 million (US$10.9 million) and RMB120 million (US$16.4 million) for its subsidiary, Jiangxi Jinko, a decline of over 98% compared to 2023 profits. The company also predicted preliminary net losses of RMB750 million to RMB1,050 million, excluding extraordinary gains and losses. JinkoSolar's results exhibited a broader trend among major solar manufacturers, with growing solar module shipments and flat or declining revenues due to falling prices.

LONGi, another leading solar manufacturer, expects to post losses between RMB8.2 billion (US$1.1 billion) and RMB8.8 billion (US$1.2 billion) in 2024, following US$1.26 billion in losses in its Q1-3 2024 financial results. LONGi has been advocating for controls and measures to control falling prices and overcapacity, such as introducing bidding rules to control prices.

The Chinese government has been actively involved in addressing the overcapacity and price issues in the solar industry. In late 2023, the government implemented self-discipline measures to curb output and prop up prices, as the industry was struggling with a supply glut that led to price crashes and forced some smaller producers into bankruptcy or consolidation. LONGi, one of the leading solar manufacturers, has been a strong advocate for government intervention, petitioning the Chinese government to introduce bidding rules to control prices.

To stabilize the market, the Chinese government is considering various measures, such as introducing bidding rules to control prices, encouraging strategic contraction and focusing on technology and research & development (R&D), and promoting technological innovation through licensing the rights to back contact (BC) technology. These measures aim to promote innovation and improve the competitiveness of the Chinese solar industry in the global market.

The solar industry is expected to face further challenges in the coming quarters, with major manufacturers reporting significant financial losses and the Chinese government implementing measures to stabilize the market. Investors should closely monitor the developments in the solar industry and consider the potential impacts on their portfolios.