China's troubled solar sector may be near a turning point

Some analysts see final stage of downcycle ahead, with cyclical bottom likely in 2025

China's solar manufacturers have just been through a bloodbath of an earnings season, but there are tentative signs the massive glut that is plaguing the industry could be starting to ease.

Longi Green Energy Technology and five other leading solar firms racked up a combined US$2 billion (S$2.6 billion) of losses in the first half after a frenzy of factory building over the past few years created excess capacity that has driven prices to record lows. Some smaller companies have already been forced into restructuring, while rising trade tensions with the United States and Europe may put exports at risk.

The financial pain looks to be planting the seeds for a turnaround, although a meaningful rebound is unlikely until 2025. Goldman Sachs Group sees an imminent wave of factory closures that would help rebalance the market, while Morgan Stanley reckons equipment prices have already bottomed out.

Longi said it hoped to "push the industry out of a quagmire of low price competition" as it raised solar wafer prices last week.

TCL Zhonghuan Renewable Energy Technology also said last week it would increase prices of three types of wafers, according to a news report in Chinese media.