Chinese solar panel industry faces prolonged losses amid supply glut

In China's bustling solar panel manufacturing sector, a period of turbulence has emerged as industry leaders grapple with persistent oversupply and intense domestic competition.

The rapid expansion driven by favorable policies and accessible materials has led to a glut in the market, pushing prices below sustainable levels, Caliber.Az reports citing the foreign media.

As major players like Longi Green Energy Technology and others forecast continued losses amid the ongoing imbalance between supply and demand, the industry faces a pivotal moment of restructuring and adaptation. This environment has prompted some manufacturers to prioritize short-term gains over long-term sustainability, raising concerns about product quality amidst the race to maintain market share.

The rapid growth of solar panel manufacturing in China has resulted in significant losses for major producers, who are compelled to sell their products below market prices.

Longi Green Energy Technology predicts that the oversupply in the Chinese solar panel market will persist for another two years.

Major PV panel producers have informed analysts from Citi and Daiwa Capital that solar panel prices in China are not expected to surpass costs in the near future. According to Citi Research analysts quoted by Bloomberg on Monday, industry-wide losses are likely to continue due to oversupply in the market. The boom in China, supported by inexpensive materials and government policies, has begun to impact the profitability of solar panel manufacturers.

Longi Green Energy Technology highlighted in its 2023 annual report that "photovoltaic product prices plummeted in 2023, particularly in the fourth quarter, with module bidding prices hitting new lows." The company anticipates a reshaping of the industry this year, with financially weaker and technologically inferior manufacturers exiting the market.

Longi stated in April, "Enterprises with high debt and product homogenization have started to withdraw from the market due to the rapid decline in industry chain prices and stricter market financing policies." The company also expressed optimism that as outdated capacities are phased out, leading companies with superior products will see gradual performance recovery.

Analysts warn that the solar industry will continue to accumulate losses until a recovery takes place. Recently, executives from China's leading solar manufacturers acknowledged an "interim overcapacity" in the sector, a consequence of the rapid expansion witnessed in recent years.

The solar manufacturing boom in China has intensified domestic competition for market share, prompting some manufacturers to prioritize higher profits over product quality. Earlier this year, an executive from the world's largest solar manufacturer noted that companies are increasingly sacrificing quality and rigorous testing in their pursuit of survival amidst fierce competition in China's solar component market.