The photovoltaic (PV) industry has entered a downward adjustment cycle, which is reflected in the secondary market with the continuous decline of stock prices for most PV companies, exhibiting a trend of fluctuating and falling.
As of the time of the First Financial reporter's submission today, the WIND Photovoltaic Index has dropped to 2524, falling by 14.37% in the past 20 days, and has decreased by 29.30% since the beginning of this year, setting a new low for the photovoltaic sector in the past three years.
In February of this year, the photovoltaic sector rebounded rapidly following the market and reached its peak in mid-March, only to return to a downward channel afterward. Zhongyuan Securities stated that in addition to the overall market investors' reduced risk appetite, the deterioration of the competitive landscape due to industry capacity and supply-demand imbalance, and the weakening of profit expectations are the main reasons affecting the inflow and outflow of funds.
The First Financial reporter observed that in the first half of this year, influenced by the industry's supply-demand imbalance, the prices of photovoltaic main materials have plummeted significantly, with prices at multiple stages breaking below the cash cost. Layoffs, production line closures, and reduced operation rates in photovoltaic companies have been occurring continuously, signaling the industry's entry into a de-capacity phase.
Advertisement
Up to now, the four major links in the photovoltaic industry chain—silicon materials, wafers, cells, and modules—have essentially broken below the cash cost, with the entire industry chain under pressure. During this round of the photovoltaic industry's fluctuation cycle, the overall capacity has expanded by about three times, but the profit margin has decreased by approximately 70%.
As the industry hits the bottom, some small and medium-sized enterprises are facing the risk of delisting.
Companies being ST (Special Treatment) or delisted generally include financial issues, regulatory issues, and significant legal violations, among others. Currently, the number of PV listed companies on the A-share market that have been ST has increased to eight. ST Yili, ST Lingda, ST Hangao, ST Aikang, and ST Sunshine have seen their stock prices drop by more than 80% since the beginning of the year. Among them, ST Sunshine has been suspended after experiencing 28 consecutive trading day price limits, starting on June 14; ST Aikang announced a suspension starting on June 19; ST Yili also joined the suspension on June 24.
On the evening of June 13, ST Sunshine (600220.SH) issued an announcement stating that the company's stock has closed at a price below 1 yuan for 20 consecutive trading days, triggering the trading category delisting criteria as stipulated by the "Shanghai Stock Exchange Stock Listing Rules."
On June 4, Sunshine Zhongke issued an announcement stating that the company decided to suspend production on June 3, 2024, and will resume production and work according to market conditions. "During the suspension period, the company will properly accommodate employees, actively take measures to reduce various costs during the suspension period, and strive to resume normal production as soon as possible. The company will continue to maintain the supply and demand relationship with suppliers and customers to ensure the supply of raw materials and product sales after resuming production." said Sunshine Zhongke.
On May 15, ST Lingda (300125.SZ) issued an announcement regarding the continued suspension of production at its subsidiary and risk warning. The announcement showed that considering the company's current financial strain and existing debt default situation, the company decided to continue the suspension of the main production equipment at Jinzhai Jiayue. It is noteworthy that in this suspension announcement, ST Lingda did not specify the exact time for resumption of production.However, this "brutal" industry reshuffling has only just begun, and it is believed within the industry that the sector will continue to enter a period of deep adjustment in the second half of the year.
"This round of reshuffling can be considered the industry's first market-driven one, and due to the excessively rapid expansion in the past two years, the process will be extremely brutal," Wu Fei, Chairman of Wuxi Suntech, told Yicai reporters. In the short term, this year and next year will be years of reshuffling and price wars, and the industry will be extremely brutal.
"This brutality is to some extent brought upon by our industry itself," Wu Fei believes that when we were making excessive profits in 2021 and 2022, with "locking in volume but not price" and daily price increases, it was destined that the industry would see a decline in prices and a continuous refresh of the lowest bidding prices this year and next year.
"Someone must leave the 'poker table' for the signal to reverse. Only when a large number of new silicon material players exit, default, or become insolvent, will it be the true bottom of the industry," Lan Tianshi, Co-CEO of GCL Technology (3800.HK), told reporters.
In its latest mid-term strategy report, Central China Securities pointed out that integrated manufacturers have generally closed some production lines and reduced operating rates. It is expected that the reduction in load by enterprises will continue to exist in the second half of 2024, and manufacturers with weaker financial strength in the third and fourth tiers will be the first to be eliminated.
"The silicon material segment is expected to be in a painful process of clearing out in the second half of the year," Yao Yao, Chief Analyst of New Energy and Power Equipment at Guojin Securities, recently stated publicly that the current silicon material price has already fallen below the cash cost of the entire industry. It is expected that the silicon material segment will soon (within an estimated 1 to 2 months) usher in a process of accelerated production suspension, monthly supply and demand balance, and price bottoming out and rebounding as the middle and downstream replenish their inventories.
According to Yao Yao's analysis, starting from the end of March 2024, the price of silicon material has fallen rapidly. Based on the current price, the main industry chain has basically entered a negative gross profit state, with only the photovoltaic module (purchased cell chips and TOPCon integrated) segment still having some gross profit.
"Silicon material inventory accumulation is expected to become the market norm in the future," industry consulting firm InfoLink stated. As of June this year, silicon material has reached an inventory level of 250,000 to 290,000 tons, equivalent to an accumulated inventory of more than 1.5 months. As of June this year, photovoltaic modules have an inventory of about 2 months. "Although some manufacturers have planned maintenance and reduced production in hopes of easing the oversupply issue, the actual production capacity has not significantly decreased due to the prisoner's dilemma effect among manufacturers."
Industry consulting firm InfoLink also stated that, affected by trade restrictions and policy instability, several leading manufacturers have planned to reduce production, and manufacturers in the middle and later stages have also seen a downward revision in their production schedules. Coupled with weak domestic market demand this year, the situation in the photovoltaic module segment is relatively pessimistic.
Comments