(Bloomberg) -- Longi Green Energy Technology Co. reported a net loss of 5.24 billion yuan ($739 million) in the first six months of the year as the sector struggles with overcapacity that brought prices to record low levels.
The loss is within the range flagged by the world’s top producer of solar wafers last month, which Longi attributed to a “mismatch” of supply and demand that led to a significant drop in prices for its major products. The result compares with net income of 9.2 billion yuan a year ago.
China’s solar industry is drowning in overcapacity that has squeezed prices and left many producers facing cash flow pressure. While bigger players can use production halts and layoffs to mitigate some impact from the downturn, small manufacturers with weaker financial positions have already slipped into restructuring or bankruptcy.
Prices of solar wafers, thin squares of polysilicon that get wired into cells and then assembled into panels, traded at a record low $0.153 per piece throughout most of June and July, according to BloombergNEF data. Longi recently tried to jolt the industry out of its doldrums, raising prices in what it said was an attempt to “push the industry out of a quagmire of low price competition.”
Any rebound isn’t expected to happen fast. It will take another six-to-12 months for supply chain prices to return to break-even levels for most companies, Morgan Stanley said in a recent research note.
Tongwei Co., the top manufacturer of polysilicon and solar cells, also reported a first-half net loss of 3.13 billion yuan, compared with net income of 13.3 billion yuan a year ago.
The company this month announced the industry’s first major merger during the current downturn, buying a smaller rival. Industry leaders have called on the Chinese government to help speed up industry consolidation along with other measures to support the sector.
--With assistance from Foster Wong and Ben Sharples.
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