(Bloomberg) -- Chinese solar manufacturers will face a reckoning next year, with overcapacity and a fierce price war forcing many smaller firms out of business, according to the head of Anhui Huasun Energy Co.
“A considerable number of smaller companies won’t be able to survive the first half of next year,” Xu Xiaohua, chairman and chief executive officer of the privately held firm, said in a panel discussion at the BloombergNEF Summit in Shanghai. However, the consolidation should pave the way for a rebound in prices toward the end of the year, he said.
China’s solar industry, by far the world’s largest, is struggling with hefty losses after a frenzy of factory building resulted in a severe glut that has already forced some firms into bankruptcy. However, there’s yet to be a big drop in manufacturing capacity as installations continue apace, with two of the biggest producers calling last month for authorities to crack down on firms that are bidding for projects at below-cost prices.
Huasun Energy’s view chimes with predictions from banks including Goldman Sachs Group Inc. and Morgan Stanley that next year could be a turning point for the solar industry as factories shut and prices finally started to recover.
“The keyword for the next year is surviving,” Xing Guoqiang, chief technology officer of major solar manufacturer Tongwei Co., said on the panel. “2025 will be very important for many companies to survive this cycle.”
Not everyone was optimistic about an imminent turnaround in the industry’s fortunes, however.
“The assumption of a sector bottoming out in next year doesn’t look probable,” said Zhang Longgen, chairman of United Solar Polysilicon. “Considering the current capacity level, it might take at least three years for wafer and module sectors to bottom out.”
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