Measures such as raising industry standards and gradually phasing out subsidies are also likely to continue
CHINA’S market regulator has warned several producers of polysilicon, a key material in solar panels, about monopoly risks stemming from their consolidation efforts in the oversupplied sector.
Six companies, including Tongwei and GCL Technology Holdings, along with the industry association, were summoned by the State Administration for Market Regulation, local media outlet Securities Times reported on Thursday (Jan 8), citing unnamed sources. The agency warned them not to coordinate on production capacity, sales volume and prices.
Shares in Tongwei fell more than 3 per cent after the market opened in Shanghai on Friday, while GCL dropped more than 4 per cent in Hong Kong.
Tongwei and GCL declined to comment, and the China Photovoltaic Industry Association did not immediately respond to a request for comment.
The regulatory intervention comes after the country’s polysilicon sector spent much of last year setting up a fund through which major producers can buy outdated capacity from smaller rivals, easing a supply glut. Expectations for the fund’s setup had spurred a mid-year surge in polysilicon prices amid improved market sentiment, and it was launched in December.
“The meeting with the State Administration for Market Regulation likely confirms our scepticism of the polysilicon acquisition plan,” BofA Global Research analysts, including Gary Tsang, wrote in a note, adding that the plan “appears too aggressive”.
The latest development, though not quite a failure of the sector’s consolidation efforts, nevertheless highlights challenges for an industry facing prolonged losses. “Some solar companies have said the surge in polysilicon prices without other supply chain price recovery is unsustainable,” the analysts said.
Going forward, the analysts expect a broader redistribution of profits across the solar supply chain rather than concentration in the polysilicon segment alone. Measures such as raising industry standards and gradually phasing out subsidies, including export tax rebates, are also likely to continue. BLOOMBERG
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