The Photovoltaic Industry Has Reached A Turning Point, And Recovery Is Imminent

Recently, China has frequently issued policies for the photovoltaic industry. Domestic departments have repeatedly expressed their high attention to the photovoltaic industry. Supply and demand policies are expected to be gradually implemented. Photovoltaic installations in overseas non-European and American markets have maintained rapid growth. The Fed's interest rate cut is expected to drive European and American demand to maintain a high growth rate, and the global photovoltaic industry will continue to be in a medium- and long-term boom. Short-term policy guidance and market-oriented means may accelerate the speed of supply-side clearance. The mismatch between supply and demand in the industry is expected to improve quarter by quarter, and prices and profits in the industrial chain are expected to return to reasonable levels, starting a new round of upward cycle.

Domestic top-level departments and industry associations have repeatedly expressed their views, which are expected to guide the improvement of the photovoltaic supply and demand pattern.

1) Supply side: The Politburo of the CPC Central Committee proposed to prevent "involution" vicious competition. The National Energy Administration stated that it is reasonable to guide the construction and release of photovoltaic upstream capacity. The Photovoltaic Industry Association organized a symposium to prevent the industry's "anti-involution" and stated that the bidding for photovoltaic components below cost is suspected of being illegal and is expected to strengthen supply-side constraints.

2) Demand side: The Energy Law was officially issued, and the National Development and Reform Commission and other six ministries and commissions issued the "Guiding Opinions on Vigorously Implementing Renewable Energy Substitution Actions", which is expected to boost photovoltaic installation demand. Europe and the United States have started a cycle of interest rate cuts, which is expected to drive photovoltaic installations to maintain a high growth rate. Non-European and American markets continue to be highly prosperous, with strong demand in India, Brazil, the Middle East and other places. It is estimated that the global photovoltaic installation will increase by 520/600GW in 24-25, up 27%/+15% year-on-year.

Since 24 years, the price of photovoltaic industry chain has continued to fall, which has broken through the cash cost of some leading enterprises, and the industry's profit level is at the bottom range. The net profit of the photovoltaic industry in Q3 improved month-on-month, mainly due to the bottoming of prices, which reduced the inventory impairment loss month-on-month.

Policy guidance restricts the expansion of low-end production capacity, and enterprises' financing channels are limited. Capital expenditures continue to be reduced. Many new production capacities have announced the termination or postponement of production. The operating rates of various links continue to decline, and enterprises continue to encounter operating difficulties and go bankrupt and reorganize.

From the perspective of start-up and shutdown costs, industry structure, cost curves, etc., silicon materials, batteries, and glass links may be the first to achieve capacity clearance. Some leading companies are expected to withdraw their capacity in the first half of 25 ("Photovoltaic Global Tour China: Supply and Demand Imbalance, When to Clear") was released on September 28, 24), and supply-side reform is expected to drive the industry to accelerate clearance.

1) Granular silicon: The cost advantage is obvious, and product quality continues to improve. Against the backdrop of the cancellation of preferential electricity prices in various places, granular silicon has significant economics and downstream recognition continues to increase.

2) Battery: TOPCon has become the mainstream of the industry, and technologies such as 0BB/stacked grid promote continuous improvement in efficiency;

HJT has introduced cost reduction measures such as 0BB and silver-clad copper, and its profitability continues to be optimized;

BC mass production efficiency continues to break through, and industrialization is expected to accelerate; the perovskite GW-level production line is expected to be launched.

3) U.S. market: Companies with local production capacity and channel advantages in the United States are expected to enjoy high premium dividends in the U.S. market, and combined with IRA subsidies, they are expected to increase the overall profit margin level.

The supply-side policy continues to be implemented, which is expected to drive the price of the industry chain to stabilize and rise. Since the Photovoltaic Industry Association announced that the tax-inclusive production cost of integrated components is RMB 0.68/W, the quotations of leading component companies have risen, and energy groups have also resisted the quotations below cost. Second- and third-tier companies may face a decline in orders, which is expected to accelerate the speed of supply-side clearing. The mismatch between supply and demand in the industry is expected to improve quarter by quarter, and the prices and profits of the industry chain are expected to return to a reasonable level, starting a new round of upward cycle.