China’s Longi Green narrows loss as solar installations surge

[BEIJING] Chinese solar giant Longi Green Energy Technology posted a narrower first-half loss as a surge in solar panel installations helped limit the impact of industry overcapacity.

The company reported a net loss of 2.6 billion yuan (S$465 million) in the first six months, according to a statement on Friday (Aug 22), compared with a loss of 5.2 billion yuan a year earlier. The improvement came after developers rushed to install projects to lock in better returns ahead of less favourable pricing policies from June.

Longi said that the solar industry continued to face intense competition during the first half of the year, with persistent supply-demand imbalances weighing on the sector. It added that the industry faces a difficult transition, characterised by overcapacity, margin pressures and shifting market dynamics.

Although solar additions rose to record levels as a result, the passing of the deadline has left manufacturers like Longi still facing the same deep-seated problem of overcapacity that has hammered profits over the last couple of years.

In response, the industry had turned to funding plant retirements. Chinese authorities have amped up their rhetoric against so-called involution, pledging to put an end to the ruinous competition that bedevils a number of Chinese industries.

In a meeting with solar firms this week, the government vowed to curb low-price, “disorderly competition” and push for outdated capacity to be eliminated. BLOOMBERG