Beijing’s fight against disastrous competition in the solar-equipment sector showed early signs of success, with a sustained recovery in prices likely to return leading polysilicon makers to profitability after 18 months of losses, according to analysts.
A raft of initiatives – including a proposal to limit manufacturing plants’ power use – following a series of government-industry meetings to discuss self-imposed production controls, had borne early fruit, they said.
“Upstream solar-product prices continue rising this week, up 2 to 4 per cent week on week, supported by positive policy sentiment on industry capacity consolidation,” said Pierre Lau, Citigroup’s head of Asian utilities and clean energy research, in a report on Thursday.
Between early last month and early this month, prices for polysilicon, solar wafers and solar cells have risen 5 to 7 per cent, said Gary Zhou, Deutsche Bank’s head of renewables and utilities research.
“At current spot [market] prices, we estimate top-tier polysilicon producers such as GCL Technology may turn to a positive net profit margin starting from September, one of the earliest along the solar value chain,” he said in a note on Thursday.
GCL shares fell 2.2 per cent to HK$1.36 on Thursday, as the Hang Seng Index declined 1.4 per cent. The stock has risen 8 per cent since the energy caps were proposed.
On Tuesday, the firm raised HK$5.4 billion (US$694 million), partly to fund “supply-side reform to promote the structural adjustment of polysilicon production capacity”.
