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China solar stocks soar as Beijing tries to end price wars

Several China solar stocks rose sharply on Friday, continuing an upward trend that began on Wednesday, on the news that Beijing is looking to slow down aggressive price cuts that have driven prices of certain components by almost 30% over the past year, according to one estimate.

Price wars have been sparked by overcapacity and price reductions made to clear stocks among Chinese manufacturers. Analysts are concerned that further price cuts could lead to deflation, and hinder efforts to stabilize the $19 trillion economy.

The shares of JA Solar, the leading solar manufacturer, rose by nearly 10%. They had gained 20 percent since July 1, when leaders of the second largest economy in the world pledged to take measures to stop the price wars.

On July 3, the industry ministry announced that it would stop price wars in the solar sector and phase out old capacity.

The Oil Price Information Service's (OPIS') assessment of high-efficiency TOPCon (tunnel oxide passivated contacts) modules indicates that prices in the solar industry will fall by nearly 30% between 2024 and 2025.

The stock prices of Longi Green, JinkoSolar, and Trina Solar all rose more than 10% in the last month. Companies did not respond when asked for comments.

Longi announced to state media last week that it would begin commercialising high-efficiency products earlier in order to solve the low-price problem.

Stocks of Xinjiang Daqo New Energy, Tongwei and Xinjiang Daqo New Energy have both risen by 29% since the start of July.

Daqo shares, listed in Shanghai, closed Thursday at 26,48 yuan (3.69 dollars), their highest price in almost seven months. Daqo didn't respond to an email request for comment, and Tongwei refused to comment.

In a note published on Thursday, Pierre Lau, Citi's managing director, stated that "whether solar share prices will rise this time around is dependent on the release of an effective policy."

He said that prior initiatives to reduce excess capacity in the industry had driven prices up as much as 40 percent in just two weeks in October of 2024.

Rumours unconfirmed that the National Development and Reform Commission, a powerful state planner, had met with polysilicon producers and asked them to maintain prices above the cost level also supported the price rise.

NDRC has not responded to a faxed comment request.

Berneuter Research, a consultancy, reports that the market price for a kilogram of meat in China is below $4.50, which is lower than most manufacturers' actual costs.

Caixin reported that Tongwei, along with its polysilicon-producing peer GCL, were also preparing a plan for a new company, which would be set up to purchase excess factory capacity. This was according to people familiar with the situation.

Citi's Lau stated that although the price of polysilicon has risen by 18% to 21% in the past two weeks, downstream solar manufacturers have continued to resist the increases. (Reporting and editing by Clarence Fernandez; Colleen howe)

(source: Reuters)