Solar Stocks Surge, Multiple Stocks Hit Daily Limit
On October 23rd, photovoltaic (PV) concept stocks experienced unusual movements in the afternoon, with Tongwei Shares and Fuling Forte rapidly rising to hit the daily limit. Daqo Energy, TCL Zhonghuan, and Jinko Technology all successively reached their daily limits, while Longi Green Energy, Jinko Energy, and Sungrow Power were all significantly increasing in value.
In terms of news, according to a report by Caixin Global, the U.S. Federal official website announced that starting from October 21st, the U.S. Department of Commerce initiated a Changed Circumstances Review (CCR), considering the partial revocation of anti-dumping and countervailing duties (AD/CVD) on Chinese crystalline silicon photovoltaic cells, and invited relevant parties to express their opinions. The products involved are certain small, low-wattage, off-grid crystalline silicon photovoltaic (CSPV) cells.
Based on statistical data from the China Photovoltaic Industry Association, as reported by the China Electric Power News Network, in the first half of 2024, the prices of polysilicon and silicon wafers fell by more than 40%, and the prices of cells and modules decreased by more than 15%. In terms of output value, the domestic photovoltaic manufacturing end (excluding inverters) was approximately 538.6 billion yuan, a year-on-year decrease of 36.5%; in terms of export value, the total export value of China's photovoltaic products (silicon wafers, cells, modules) was about 18.67 billion U.S. dollars, a year-on-year decrease of 35.4%.
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In fact, the days for Chinese photovoltaic companies have already changed significantly for the worse.
Taking the four major photovoltaic module companies as an example, in the first half of 2024, Jinko Energy, Trina Solar, Longi Green Energy, and Jinko Technology experienced varying degrees of performance decline or losses. Longi Green Energy and Jinko Technology respectively suffered losses of 5.243 billion yuan and 874 million yuan, a year-on-year decrease of 157.13% and 118.16%. Jinko Energy and Trina Solar did not suffer losses but also encountered a decline in performance. Jinko Energy's operating income was 47.251 billion yuan, a year-on-year decrease of 11.88%; its net profit attributable to the parent company was 1.2 billion yuan, a year-on-year decrease of 68.77%; Trina Solar's operating income was 42.968 billion yuan, a year-on-year decrease of 12.99%; its net profit attributable to the parent company was 526 million yuan, a year-on-year decrease of 85.14%.
On the other side of the Pacific, the U.S.-based First Solar recently successfully surpassed Longi Green Energy in market value, becoming the largest company in the global photovoltaic sector. Against the backdrop of China's absolute dominance in the global photovoltaic industry, this situation was unexpected and hard to accept.
The fierce counterattack of U.S. photovoltaics began in 2022.
In August of that year, Biden signed the Inflation Reduction Act (IRA), which proposed a plan to issue $737 billion in subsidies over 10 years, with $369 billion allocated to addressing climate change and enhancing energy security, with the core being subsidies for photovoltaic and other new energy industries to support domestic companies.
According to previous calculations by Bloomberg New Energy Finance, the subsidies under the IRA for the entire U.S. solar industry could theoretically reach 17 cents per watt, a figure that is already close to the production costs of Chinese companies. This means that even if U.S. companies have much higher costs than Chinese companies and no market competitiveness, they would still be profitable after subsidies.
Taking First Solar as an example, in 2023, the company achieved a total net profit of $831 million, with at least $700 million coming from subsidies, while in 2022, the company's net profit was a loss of $44.166 million.High-intensity subsidies have thoroughly activated the production enthusiasm of American photovoltaic (PV) enterprises. Since 2022, the domestic PV capacity in the United States has been soaring rapidly.
In 2022, the United States had approximately only 8GW of local module capacity, which quickly increased to over 13GW by 2023. According to Wood Mackenzie statistics, based on the currently announced plans, the U.S. module capacity will exceed 120GW by 2026, which is three times the domestic PV installation demand for that year.
Before 2022, the United States had almost no silicon wafer and cell capacity locally. However, according to InfoLink data, by 2025, the capacities for U.S. silicon material, silicon wafers, and cells will reach 25GW, 11GW, and 24GW, respectively.
The Solar Energy Industries Association (SEIA) previously wrote in a report: We once thought that the goal of the United States having 50GW of PV module capacity by 2030 was unattainable, but now, this goal has been essentially achieved.
After the "double anti" in 2011, the proportion of U.S. photovoltaic module imports from China has dropped from a high of 50% to below 3%, but since then, U.S. imports from Vietnam, Malaysia, Cambodia, and Thailand have been continuously increasing, with the proportion exceeding 70% by 2022.
For a long time, there has been a mainstream view that the United States cannot do without Chinese photovoltaics, and now it may be necessary to reassess the future of this view.
As the defender, China has only one choice, which is to do its best and prepare to meet challenges.
In the past few years, some very disharmonious and irrational behaviors have emerged in China's photovoltaic industry.
From 2020 to 2023, from the core specific segments of polysilicon, silicon wafers, cells, and modules, to the auxiliary material segments of photovoltaic glass, adhesive films, and diamond wire, the entire industry has invested about 3 trillion yuan, including both the expansion of existing photovoltaic enterprises and a large number of enterprises from unrelated fields entering the photovoltaic industry. According to statistics from the China Photovoltaic Industry Association, in 2023, China's polysilicon, silicon wafer, cell, and module production reached 1.43 million tons, 622GW, 545GW, and 499GW, respectively, with year-on-year increases of 66.9%, 67.5%, 64.9%, and 69.3%.
The rapid expansion in a short period directly led the industry into low-price competition. In the first quarter of 2024, the total operating income of 120 listed photovoltaic companies was 314.369 billion yuan, a year-on-year decrease of 15.47%, and the total net profit attributable to the parent company was 13.5 billion yuan, a year-on-year decrease of 71.98%. Looking at the semi-annual reports, some leading companies have already suffered huge losses.On the other side, First Solar, an American company, reported a total revenue of $794 million in the first quarter of this year, a year-on-year increase of 44.83%, with a profit of $237 million, a year-on-year increase of 455.95%. As of Q1 2024, the company has orders on hand totaling 78.3GW, with an order scale reaching $23.4 billion.
This contrast in profitability is a complete reversal from two years ago. The ineffective internal competition among domestic photovoltaic companies is already affecting the industry's progress. It is imperative to quickly escape the trap of internal friction and unite to look forward. More human, financial, and material resources should be invested in planning and building for the future, rather than just focusing on immediate gains. Conversely, as long as domestic photovoltaic companies stay on the right developmental track, the future will still belong to China.
So far, China's global market share in various segments such as silicon materials, wafers, cells, and modules has reached 70%, or even over 80%. It possesses the most advanced technology, the most complete manufacturing capabilities, and the richest experience in industry development. None of these are given for free.
In summary, while pressure and resistance are objectively present, we need to maintain a necessary sense of crisis. At the same time, the prospects and advantages are clear, and we should hold confidence and enthusiasm.
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