Yangtze River Business Daily News ● Yangtze River Business Daily reporter Shen Yourong

The

photovoltaic industry has set off an upsurge of vicious competition to prevent "involution", and the two leading companies have taken the lead in announcing production cuts.

On the evening of December 24, the giant Tongwei Co., Ltd. (600438. SH) announced a phased production reduction to promote the healthy and sustainable development of the photovoltaic industry.

That night, Daqo Energy (688303. SH) also posted on its official Weibo that at present, the industry as a whole continues to face the severe challenge of comprehensive losses, and in order to prevent "involution" vicious competition, the company will gradually reduce production and control production in an orderly manner on some production lines.

In the past few years, the photovoltaic industry has been booming, and enterprises have expanded production. Now, the after-effects of the radical expansion are emerging. Since the beginning of this year, affected by multiple factors, the operation of enterprises in the industry has been generally under pressure. In the first three quarters of this year, Tongwei lost 3.973 billion yuan, Daqo Energy lost 1.1 billion yuan, TCL Zhonghuan lost more than 6 billion yuan, and downstream module companies LONGi Green Energy and Trina Solar also lost money.

A reporter from Changjiang Business Daily found that the loss was mainly due to the imbalance between supply and demand, and the price of polysilicon fell, and the company made a provision for price loss. In the first nine months of this year, the asset impairment losses of Tongwei and Daqo Energy were 3.329 billion yuan and 1.367 billion yuan respectively.

Not only Tongwei Co., Ltd. and Daqo Energy are controlling production and reducing production, but it is also reported that GCL Technology also has a production reduction and production control plan to be announced soon. Some people in the photovoltaic industry said that some companies have actually implemented production reductions through maintenance and other means.

As of the end of this year, the total production capacity of the three giants of Tongwei Co., Ltd., GCL Technology and Daqo Energy reached 1.705 million tons.

The

upstream and downstream of the photovoltaic industry chain may set off a round of comprehensive production reduction and production control, and the problem of "involution" vicious competition is expected to be resolved.

PV giants have announced orderly production cuts

The silicon material link in the upstream of the photovoltaic industry took the lead in firing the first shot of production reduction and production control.

On the evening of December 24, Tongwei announced a plan to control and reduce production. Tongwei Co., Ltd. said that at present, due to the winter dry period in the southwest region, the impact of the month-on-month increase in electricity prices, considering that the overall market of the photovoltaic industry continues to be in the bottom adjustment stage, the company's Yongxiang Co., Ltd. actively responded to the spirit of the Central Economic Work Conference, committed to breaking the "involution" competition, promoting the long-term and healthy development of the photovoltaic industry, and gradually arranged four high-purity crystalline silicon production companies such as Yunnan Tongwei High-Purity Crystalline Silicon Co., Ltd., a subsidiary of Yongxiang Co., Ltd., to carry out technical transformation and maintenance work, and reduce production and control production in a phased and orderly manner. The specific arrangements for the resumption of production will be planned according to the changes in electricity prices and market conditions in the project area.

Tongwei is a leader in the field of polysilicon and batteries, and is the world's largest battery manufacturer. According to public information, Yongxiang's high-purity crystalline silicon production capacity exceeds 900,000 tons.

The company will gradually start the phased maintenance of high-purity polysilicon production lines in Xinjiang and Inner Mongolia production bases, and carry out orderly production reduction and production control for some production lines.

Daqo Energy is a leading professional manufacturer of polysilicon in China, and its main product polysilicon is mainly used to process solar photovoltaic products such as silicon ingots, silicon wafers, cells and modules, and is the front-end supplier of the photovoltaic industry chain. At present, Daqo Energy has two production bases in Shihezi, Xinjiang and Baotou, Inner Mongolia, and has formed an annual production capacity of 305,000 tons of high-quality, low-energy, low-cost high-purity polysilicon.

In addition, it is reported that GCL Technology also has a production reduction and production control plan to be announced soon.

According to statistics, by the end of this year, the production capacity of major polysilicon listed companies Tongwei Co., Ltd., GCL Technology, Daqo Energy and Xinte Energy will reach 900,000 tons, 500,000 tons, 305,000 tons and 300,000 tons respectively.

The total production capacity of the top three giants is 1.705 million tons, and their simultaneous production reduction and production control will have a greater impact on the industry.

It is worth mentioning that on the evening of December 24, Xinte Energy announced the termination of the A-share IPO. Previously, the company returned to A and planned to raise 8.8 billion yuan for the construction of a green and low-carbon circular economy construction project with an annual output of 200,000 tons of high-end electronic-grade polysilicon in Zhundong, Xinjiang. The project will be constructed in two phases, the first phase has been completed, and the second phase will not be constructed temporarily.

On December 25, Xinte Energy publicly responded that at present, the entire industry is controlling production and reducing production, and the company is no exception.

After-effects of radical expansion

The reduction of production is actually an initiative to save itself. "The more you produce, the more you lose" is the status quo of the photovoltaic industry.

Since the beginning of this year, the industry situation has changed, the contradiction between supply and demand imbalance is prominent, and the overall loss of industry enterprises has achieved operating income of 6.005 billion yuan in the first three quarters, a year-on-year decrease of 53.37%; The net profit attributable to shareholders of the parent company (hereinafter referred to as the "net profit attributable to the parent company") was -1.099 billion yuan, and the net profit after deducting non-recurring gains and losses (hereinafter referred to as "non-net profit") was -1.171 billion yuan, down 121.49% and 124.18% year-on-year.

This is the first time Daqo Energy has posted a loss since 2015.

From the perspective of a single quarter, in the first, second and third quarters of this year, Daqo Energy's operating income was 2.982 billion yuan, 1.602 billion yuan and 1.421 billion yuan respectively, a year-on-year decrease of 38.60%, 64.14% and 60.01%; The net profit attributable to the parent company was 331 million yuan, -1.001 billion yuan and -429 million yuan respectively. The first quarter was still profitable, but it fell 88.64% year-on-year, and the data for the second and third quarters showed that the company "produced less, lost less".

The main reason for this phenomenon is the decline in polysilicon prices. Due to the decline in polysilicon prices, in the first three quarters of this year, Daqo Energy made provision for asset impairment losses (mainly inventory price declines) of 30 million yuan, 781 million yuan, and 582 million yuan respectively, totaling 1.367 billion yuan, resulting in losses.

Once, under the condition of high prosperity in the domestic photovoltaic industry, Daqo Energy made a wave of crazy profits. In 2021 and 2022, the company achieved operating income of 10.83 billion yuan and 30.94 billion yuan, a year-on-year increase of 132.23% and 185.64%; The net profit attributable to the parent company was 5.724 billion yuan and 19.12 billion yuan respectively, a year-on-year increase of 448.56% and 234.06%.

It is also in this situation that Daqo Energy is vigorously expanding. At the end of 2021, the company signed an agreement with the People's Government of Baotou City, Inner Mongolia, planning to invest 33.25 billion yuan in the local production capacity construction of polysilicon and other products. At the end of 2023, the company announced that it plans to invest 15 billion yuan to expand polysilicon production in Shihezi.

Tongwei's operating conditions have also been affected. In the first three quarters of this year, Tongwei's asset impairment loss was 3.329 billion yuan, with a loss of 3.973 billion yuan.

Tongwei shares have also expanded by leaps and bounds. In 2023, Tongwei Co., Ltd. has announced a total investment of 64.5 billion yuan in production capacity construction in Leshan City, Shuangliu District of Chengdu, Emeishan District, Leshan Wutongqiao District, and Ordos City in Sichuan, of which Ordos alone will be as high as 28 billion yuan.

Due to the substantial expansion of production in the past few years, Tongwei Co., Ltd. and Daqo Energy are falling into a situation of "overcapacity".

The

imbalance between supply and demand and the decline in polysilicon prices are the main reasons for the overall loss of the industry. According to data from InfoLink Consulting, a new energy research institution, polysilicon prices were close to 200,000 yuan/mt at the beginning of 2023, dropped to 60,000-70,000 yuan/mt in the first quarter of 2024, and then to 40,000-50,000 yuan/mt in the second quarter, and remained low in the third quarter.

In fact, as early as 2023, many parties, including the media, have warned about the large-scale expansion of the photovoltaic industry.

A good thing is that the downstream is expanding rapidly because of the falling costs. According to the National Energy Administration, between January and November 2024, the newly installed domestic PV capacity reached 206.30GW, a year-on-year increase of 26%. In particular, in November, the newly installed capacity was 25.00GW, an increase of 17% year-on-year and 22% month-on-month.

With the improvement of terminal installed costs, the new domestic photovoltaic installed capacity is expected to achieve high growth, which is expected to drive the growth of upstream sales in the industrial chain and improve the imbalance pattern.

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Editor-in-charge: ZB