More Chinese Solar Makers Face Insolvency as Glut Persists

(Bloomberg) -- More Chinese solar manufacturers are facing insolvency as acute oversupply and a fierce price war forces companies to sell below cost. 

A unit of Zhejiang Bangjie Holding Group Co. is the latest firm to fall foul of creditors, after a local court was asked to put the firm into bankruptcy because it missed its debt repayments, according to a filing by the parent company this week. The court has yet too rule on the creditor’s application.

The proceedings against Zhejiang Bangjie follow court orders last month against two other small solar makers, Zhejiang Akcome New Energy Technology Co. and Gansu Golden Solar Co., that will force the companies to restructure.

China’s world-leading solar industry is going through a phase of brutal consolidation to rebalance supply and demand. Smaller and newer entrants to the market are most at risk because they lack the financial reserves and goodwill built up during the industry’s ascendancy.

Zhejiang Bangjie was mainly a garment company before it entered solar manufacturing in 2022 to profit from China’s rapid expansion of renewable power. The company had 10 gigawatts of cell manufacturing capacity as of September last year. 

That’s just a sliver of China’s manufacturing capacity of about 1,000 gigawatts, which has been built at breakneck speed to help the nation deliver on its climate goals. But solar installations globally last year were less than half that, which has left factories nursing losses and facing failure as they fight over insufficient demand both at home and abroad.

China’s main solar industry group last month called for much faster consolidation to ease the overcapacity. It could take another six to 12 months before the supply chain is back to break-even levels, Morgan Stanley said in a note.

The price of key material polysilicon rose last week for the first time since March, but the rebound could be short-lived due to persistently high inventories, according to an industry association.

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