Challenged Market
At the end of 2007, the combined market capitalization of Chinese photovoltaic (PV) companies listed on U.S. exchanges peaked at around $32 billion. Back then, only nine companies were listed. Today, while the number of listings has grown to 11, the total market cap has plummeted to just $2 billion—a staggering 90% drop from its high point. Over the past one and a half years, the price-demand elasticity model for PV products has completely broken down, with prices plummeting and demand remaining sluggish. Xu Wei attributes this primarily to the tightening of bank credit policies. As the world’s largest PV market, Europe is grappling with a severe debt crisis, leading to restricted credit availability and a dire state for the PV sector.
Moreover, according to the Jefferies Group, Chinese PV companies lost approximately $120 million in the first quarter of this year alone due to the U.S.'s anti-dumping and countervailing duties policies. This equates to needing these companies to sell over 2.4 gigawatts of modules just to recoup their losses. At present, the PV industry is facing widespread shutdowns and bankruptcies, making it incredibly difficult for companies to raise funds through traditional channels. Xu Wei mentioned that roughly 10 PV firms are currently attempting to go public but have yet to succeed.
According to data from the China Semiconductor Industry Association, the sharp decline in PV product prices has caused massive devaluation of assets among PV enterprises. Among the nine PV companies analyzed by Jefferies, asset impairment losses in the second half of last year totaled $3.9 billion. This downturn is not just affecting established players but also creating challenges for new entrants looking to break into the market.
In light of these developments, many experts are calling for urgent reforms within the PV industry. Xu Wei emphasized the need for stricter regulation and better financial support mechanisms to help stabilize the market. He also noted that while the short-term outlook remains bleak, there are still opportunities for innovation and growth if companies can adapt to changing global dynamics. With Europe’s ongoing economic struggles and increasing protectionist measures in other regions, Chinese PV firms must find ways to diversify their markets and reduce reliance on any single region.
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