Tragic! The entire photovoltaic industry chain is losing money, and the "bankruptcy tide" is beginning to stage

Huaxia Energy Network

2024-05-17 08:57Posted on the official account of Beijing Huaxia Energy Network

One day at the end of April, just when migrant workers across the country were about to start looking forward to the May Day holiday, Suntech employees in Wuxi, Jiangsu Province, put up a banner in the factory area to protest "Boycott the holiday, I want to live".

Due to the lack of orders, Wuxi Suntech decided to give employees at the Wuxi plant an unpaid leave of up to 11 months from May 1.

Production line holidays are a common way in the industry, which is equivalent to disguised layoffs. Many of these front-line workers have worked in Suntech for more than ten years, and after experiencing Suntech's glory from glory to bankruptcy and reorganization, and then to today's loneliness, they naturally cannot accept being laid off for no reason. Before 2022, Suntech's management team has undergone a major change, and a large number of middle and senior management have chosen to leave.

"With the departure of this group of old employees, the old Suntech will disappear completely, leaving only one brand." Referring to Suntech's recent situation, an industry veteran sighed in an interview with Huaxia Energy Network (public number hxny3060).

Suntech is not alone. After the disclosure of the 2023 annual report and the first quarter report of 2024, a number of companies have been listed by ST or ST since May 1, such as Zhongli Group (SZ: 002309), Aikang Technology (SZ: 002610), Lingda (SZ: 300125), Jiangsu Sunshine (SH: 600220) and other photovoltaic companies, and the risk of delisting is hanging like a sword. And with the expansion of business risks, they may face more than just delisting.

Since the second half of last year, the photovoltaic industry has opened a new round of cold winter adjustment period, and even leading enterprises have felt huge pressure, with layoffs and production stoppages endlessly. After half a year of hard work, the slightly weaker enterprises are finally unable to hold on, and a large-scale "reshuffle tide" is inevitable.

This is the darkest moment for China's photovoltaic companies, and no one can say how long this will last. At least for now, there is far from bottoming.

Production line live: "Employees sit in the workshop and play with their mobile phones"

Suntech's holidays and layoffs are a microcosm of module and battery companies. Following the sluggish utilization rate in the fourth quarter of last year, the operating conditions of the module and cell sectors have deteriorated further. In addition to Suntech, there are also news of the sale of a number of companies or projects in the industry.

In March this year, cell manufacturer Haiyuan Composite Materials announced that it had terminated its 15GW N-type high-efficiency photovoltaic cell and 3GW high-efficiency photovoltaic module project in Chuzhou and transferred it to Aiko Technology at a price of 38 million yuan.

Xie Jian, former CEO of JA Solar and former chairman and president of Risen Energy, also ended his business and transferred the equity of his self-created module brand "Yuantai Solar" to Hongyuan Green Energy, and joined a leading module manufacturer as a professional manager.

These two companies are lucky, some people "take over", and a large number of battery-end companies have to stop production and take a holiday. Recently, ST's Lingda shares, its Jinzhai Jiayue New Energy's 3.5GW PERC solar cell production line has been suspended since mid-March. According to the April 27 announcement, the company does not expect to be able to resume normal production within three months.

"At present, most of the production lines involving PERC in the industry have stopped." Hu Zhiqiang, founder of Cege Lun Photovoltaic, told Huaxia Energy Network.

According to TrendForce's China PV Industry Bidding Database, n-type modules accounted for 80% of PV module bidding from January to April this year. This means that the market share of PERC has shrunk sharply to two percent, and you can imagine how difficult the life of PERC production line companies is.

Those who are struggling to maintain production have also reported wage cuts or postponement of wage payments. Recently, an employee of a company that has been ST in the A-share market has not received wages for two months; Another cross-border TOPCon cell company issued a notice to delay the payment of wages for March and April, and then started a holiday, during which it was paid according to the local minimum wage standard (2,260 yuan/month).

There are also some companies that are still holding on, which can be described as "slapping a swollen face and becoming fat". Hu Zhiqiang told Huaxia Energy Network that a company that has laid out heterojunction batteries and is in trouble is currently only paying a basic salary, and employees go to work 8 hours a day, just sitting in the workshop and playing with their mobile phones. And there is more than one company that uses basic salaries to support employees to play mobile phones.

Downstream enterprises only have one breath left to live, and upstream enterprises are not having a good time. A person from a silicon wafer company said that the production capacity of crystal pulling has been suspended in a large area, and even the operating rate of leading enterprises is only 50% or even lower.

On the wafer side, the small wafer foundries have basically closed their doors. Medium-sized companies are cutting production. A person from a silicon wafer foundry company said that the operating rate in April and May was around 70%, which was "very stressful".

There is no worst, only worse. According to Hu Zhiqiang, a third-party silicon wafer manufacturer only started work for two or three days in more than 20 days because the inventory was too high.

In contrast, the polysilicon side is doing better, with full production in the first quarter. However, according to the Silicon Industry Branch, by early May, three polysilicon companies had already entered the maintenance state, and five more will start maintenance or technical transformation this month.

Compared with the downstream reshuffle, the reshuffle of polysilicon has just begun. Polysilicon prices have fallen below the industry's cost line, and a large number of companies that fail to control costs will pay a heavy price for this round of large-scale capacity expansion.

Big price cuts: The entire industry chain is in a difficult situation

"April was bad, and May was even worse!" Speaking of the current market situation, the above-mentioned silicon wafer companies have complained again and again.

Originally, the second quarter should have entered the peak season of the industry, but the reality is that the price of the photovoltaic industry chain has fallen sharply across the board.

After falling below RMB 1 in the fourth quarter of last year, module prices continued to fall this year. Taking N-type TOPCon modules as an example, according to Infolink data, the price has dropped from RMB 0.98/W in mid-to-early January to RMB 0.86/W, a decrease of 12%.

Wafer prices have continued to fall after a large-scale loss in the first quarter, falling by a total of 7 cents or more than 30% in more than four months. Taking n-type M10 monocrystalline silicon wafers as an example, it has now dropped to 1.4 yuan/piece.

The battery side is no longer profitable. According to Infolink data, the average transaction price of N-type cells has dropped to RMB 0.38/W. The average price of P-type 182mm cells dropped to RMB 0.33/W.

If polysilicon companies made slight profits in the first quarter, polysilicon companies have also been losing money since April. By May 9, the average transaction price of N-type material had dropped to 45,300 yuan/ton, and the average transaction price of monocrystalline dense material and monocrystalline cauliflower material had fallen below 40,000 yuan, to 39,000 yuan/ton and 37,100 yuan/ton, hitting a record low. At this price, most polysilicon companies are already losing money, except for a few leading companies (such as Tongwei) whose cost is controlled at 40,000 yuan.

The sharp decline in the price of the whole photovoltaic industry chain is closely related to high inventory. Lv Jinbiao, deputy director of the Expert Committee of the China Nonferrous Metals Silicon Industry Branch, recently mentioned that the inventory of polysilicon reached 250,000 tons at its peak after full production in the first quarter. On the wafer side, the wafer inventory also reached the warning line of more than 35GW at the end of March.

According to industry insiders, the inventory scale of a silicon wafer company has reached 5-1 billion pieces. Under the pressure of high inventories, professional wafer companies are planning to reduce production while reducing prices.

"Due to the low price of silicon wafers on the market, there is a clear trend in the industry that the integrated leaders have stopped producing their own silicon wafers and choose to purchase silicon wafers." Hu Zhiqiang said.

This is not groundless, as Trina Solar mentioned in its investor relations event in April that "the company will flexibly adjust the proportion of purchased and self-produced wafers strictly according to the cost-effectiveness situation".

The dismal wafer market has affected polysilicon trading. The high inventory of silicon wafers once led to almost zero polysilicon transactions for three consecutive weeks. After that, although the price dropped, it was not in the market. "Wafer manufacturers are afraid to take the goods because they are afraid that polysilicon prices will continue to fall in the future." The above-mentioned silicon wafer company said.

"250,000 tons is equivalent to more than a month's output in the polysilicon industry, but in fact, it is no problem in the state of 17-180,000 tons of monthly turnover inventory. The problem at the moment is that a large amount of inventory is piling up in polysilicon factories due to the shrinking of polysilicon shipments. Lv Jinbiao said.

By May, after wafer inventories improved, wafer makers began to purchase polysilicon in small quantities. However, the polysilicon market is still sluggish.

Despite the bleakness brought by the continued decline in prices, the downstream installed capacity market has reached a new high, which may be the only bright spot in the industry that can be talked about comfortably. In the first quarter, 45.74GW of new PV capacity was added in China, a year-on-year increase of 36%.

In the face of falling prices, a large number of battery module companies are suffering from the dilemma of "the more they sell, the more they lose". The Silicon Industry Branch predicts that there is a risk of large-scale production reduction at the cell module end in May.

Why are the prices of raw materials lowered, but module companies still not making money? Lv Jinbiao said that since January, the price of polysilicon has dropped by 25,000 yuan per ton, and the actual concession to the downstream is only 5 cents per watt. In addition, since module prices are still falling slightly, and the prices of other raw materials such as silver paste and glass have also risen, although the price of polysilicon has been greatly reduced, there is not much room for downstream concessions.

At present, some battery companies that have no orders and no holidays may still have a glimmer of hope for the second half of the year. However, the above-mentioned silicon wafer companies judged that "before September, it should be relatively bleak, and the entire industrial chain may be slightly better after September." ”

Lv Jinbiao also said, "Polysilicon prices have reached the bottom and are expected to rebound in the third quarter, but don't think about profits, and hope that there will be a reasonable valuation for photovoltaic products next year." ”

The big reshuffle: it's all "take advantage of your illness and kill you"

From 2023 to this year, it is common for enterprises integrating the entire industrial chain of polysilicon, wafers, cells, and modules to make no money.

The financial report for the first quarter is the truest reflection. The industry has suffered large-scale losses, even the leading enterprises have not been spared. According to incomplete statistics, among the 120 listed photovoltaic companies, 73 saw a decline in net profit. Among them, only LONGi, TCL Zhonghuan, Tongwei, and JA Solar lost a total of 4.5 billion yuan.

The leading enterprises have a deep foundation and still have room to manoeuvre, and those enterprises that have long been in crisis are speeding up their pace to withdraw from the stage of history.

There are all kinds of signs that Suntech is on the verge of life and death. At the beginning of this year, Suntech was replaced by the project team due to its inability to supply; In March, it was sued by the equipment company Micro Nano (SH: 688147) for arrears of 41.5594 million yuan.

According to an industry veteran, Suntech's holiday should have been acquired by the OEM company Jingyou Solar.

The above information is subject to further confirmation. In December last year, Wu Fei, chairman of Jingyou, took office as the chairman of Suntech. However, Tianyancha information shows that as of May 11, Suntech is still a 100% holding company of Jiangsu Shunfeng Optoelectronics Technology Co., Ltd.

"Suntech's production lines are all old production capacity, Jingyou will not want it, and there may only be Suntech brand left in the future." The above-mentioned industry veteran said.

Zhongli, another old photovoltaic factory, has long stood on the edge of the cliff of bankruptcy and reorganization.

This former "first photovoltaic poverty alleviation stock" has no money to support the transformation to the field of photovoltaic module and battery manufacturing after the development of photovoltaic poverty alleviation power stations has been saddled with tens of billions of debts and fraud losses of more than 2 billion.

Since 2020, Zhongli has begun to lose money year after year, and as of the first quarter of this year, the net profit attributable to the parent company has lost a total of 9.277 billion yuan, and the asset-liability ratio has also reached 109%. Since June 2023, Zhongli Group and a number of its subsidiaries have announced that they have entered the pre-restructuring stage.

iKang Technology, the former leader in the field of photovoltaic brackets, has experienced many transformations and strategic repetitions, not only has its performance lost for three consecutive years, but by the end of the first quarter of this year, it has lost a total of 2.279 billion yuan, and has also saved a large number of guaranteed debts. As of April 30 this year, the cumulative amount of external guarantees reviewed by iKang and its holding subsidiaries was 9.064 billion yuan, the upper limit of the actual amount of external guarantee contracts was 6.566 billion yuan, and the upper limit of the cumulative actual amount of external guarantee contracts accounted for about 323.63% of the company's latest audited net assets.

In terms of product market competitiveness, iKang cannot match its title of "heterojunction leader" - the gross profit margin of its solar cells and modules of 3.83% in 2023 is far lower than the industry level.

The fields in which iKang has successively announced strategic investment, including heterojunction cells, perovskite tandem cells, photovoltaic modules, photovoltaic power stations, energy Internet, carbon asset management, blockchain infrastructure construction, lithium batteries, and even new energy vehicles, energy private equity investment funds, etc., have experienced many strategic swings without results.

The above-mentioned senior person said that this reshuffle will definitely wash away a number of enterprises, and those companies with weak financial strength and "not really doing photovoltaics" are at risk of being eliminated.

He believes that another problem for Elken is the pace of financing. "In fact, iKang's research and development in heterojunction technology is earlier than Huasheng, but because of the problem of the capital chain, it was put into production late, and it belongs to getting up early in the morning and catching up late."

epilogue

In the second half of 2024, the deep adjustment of the photovoltaic industry chain will continue. The above-mentioned senior told Huaxia Energy Network that polysilicon will be the hardest hit area of the reshuffle of the photovoltaic industry chain in 2024. It is uncertain which polysilicon companies will be phased out, because polysilicon is a high-energy consumption industry, and it depends on who has low electricity prices and strong cash flow, and who will be better able to survive.

At the same time, he believes that "a number of module companies will definitely die this year." At present, the bidding of central state-owned enterprises only considers the top 12 module companies; The volume of private enterprises in the industrial and commercial market is limited, and it can be said that the market opportunities for small module enterprises are really limited. ”

The above-mentioned wafer companies believe that the cell sector will also be the hardest hit area, "It is estimated that 20%-30% of the companies will be washed out." ”

"At present, almost all upstream and downstream enterprises are fighting for cash flow and maintaining cash flow, and if they want to go through the cycle, they still need to look at the overall strength of cash accumulation and debt ratio." Lv Jinbiao said.

Lv Jinbiao also predicts that according to the current polysilicon production capacity of 2.00-2.1 million tons, if polysilicon companies achieve 80% capacity utilization, the industrial chain can achieve a balance between supply and demand.

However, judging from the recent expansion of polysilicon leaders, this wish may not be easy to achieve.

As the above-mentioned senior person said, cyclical fluctuations are a very normal phenomenon in the development of the photovoltaic manufacturing industry, and enterprises in all links are "going forward and successively" and spiraling forward. "After so many years, there is a wave of death, a wave of incoming, and a wave of death, and then another wave, it has always been like this......"

This is the sadness of the PV industry. Low-level repetitive competition brings a lot of wasted investment and a lot of bones in every shuffle. After the reshuffle is completed this time, will the industry go back to the old way? The choice and suspense are left to the next wave of entrants.

(Please indicate the source for reprinting, article source: Huaxia Energy Network, WeChat ID: hxny3060)

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