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Solar wafer prices plunge further in China as producers struggle

Solar wafer prices plunge further in China as producers struggle
A floating solar farm of Sungrow Power Supply Co., built on the site of a former coal mine, since filled with water, in Huainan, China, on Monday, May 15, 2023. (Photo: Qilai Shen/Bloomberg via Getty Images)

Solar equipment prices extended declines despite efforts by manufacturers to pare output in the face of severe overcapacity that threatens bankruptcies and consolidation.

Costs for solar wafers fell as much as 7.7% in the past week, the China Silicon Industry Association said late on Thursday. Manufacturers are producing below cash costs, an unsustainable situation that will definitely lead to further production cuts, it said.

China’s solar companies expect a wave of bankruptcies after capacity additions outpaced demand growth in recent years, leading to a price war that squeezed profits and saw some of the biggest producers announce massive job cuts. Some factories are operating at as low as just 70% of capacity, and there is increased pressure on companies with higher debt, according to Thursday’s statement. 

The fast growth of China’s renewables sector in recent years attracted listed companies from other industries, including dairy and pharmaceutical firms, to invest in new solar plants. Many of those investors are now leaving.

Construction material producer Jiangxi Haiyuan Composites Technology Co. said on Monday that it is selling its solar factory to Shanghai Aiko Solar Energy Co., citing “large changes in the solar market”.

Aiko is a major manufacturer that has seen its net profit plunge, but needs to invest in new capacity with more advanced technology to protect its market share. The company earlier this month said it would renovate and upgrade one of its old factories, rather than build new plants, due to “tight financial resources.”

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