(Yicai) Sept. 5 -- Major Chinese producers of photovoltaic glass confirmed that they are idling furnaces to reduce output in response to a severe supply glut, but industry insiders are unsure whether this will be enough to restore the balance to supply and demand.

Listed solar glass manufacturers have been putting furnaces into ‘cold repair’ status since the start of the second half, sources told Yicai. Facilities that would normally produce 12,000 tons per day are now inactive.

Solar glass businesses and their industry associations recently held a series of meetings to discuss production capacity cuts, an executive at Shenzhen-based Zhuzhou Kibing Group told Yicai. 

One rumor claimed there was a target to cut capacity by 30 percent, but this may not be achievable, the person said, adding that whether the oversupply situation can be properly tackled is still unknown.

PV glass is a crucial component in the photovoltaic industry that is used to cover and protect solar panels. In recent years, China's rapid expansion of solar energy has driven huge growth in the solar glass sector, resulting in higher capacity. But oversupply emerged last year, leading to falling prices and mounting inventories.

‘Cuts Remain Undetermined’

A member of the investor relations team at Flat Glass Group, China’s second-largest supplier of PV glass by market share, told Yicai that the Jiaxing-based company had been putting furnaces into cold repair since the end of July. But the firm’s “capacity cut plans remain undetermined,” the person added.

Companies are facing different situations, and have varying abilities to lower production capacity, the person said, adding that inventory has been building up at Flat Glass, so the firm shut down some legacy lines.

“Flat Glass didn't take part in the sector's joint capacity cut move,” Chairman Ruan Hongliang said at press conference held yesterday for the firm's first-half earnings results. “But we’ll lower capacity based on our own conditions and market fluctuations.”

Flat Glass is able to make 23,000 tons of solar glass daily, its first-half report showed. Of that, 2,600 tons were already in cold repair as of June 30.

Xinyi Solar Holdings, another listed PV glass maker, has a daily capacity of 29,000 tons, 2,000 tons of which were in cold repair as of June. 30, according to its semi-annual financial report.

“Glass production doesn't have as many participants as other parts of the PV industry chain, with capacity concentrated at leading players,” technology analyst told Yicai. “That's why leading PV glass makers still managed performance growth in the first half.”

Cold repairs generally take nine months, the analyst said, adding that solar glass prices may stop falling as more furnaces are idled. 

Editors: Tang Shihua, Tom Litting