China Cautions Solar Companies About Monopoly Dangers as Industry Seeks to Consolidate

China’s Antitrust Watchdog Issues Warning to Polysilicon Producers

China’s main market regulator has cautioned several leading polysilicon manufacturers, a crucial component in solar panel production, about potential antitrust violations as they pursue consolidation in an industry currently facing oversupply.

According to a Thursday report from Securities Times, citing anonymous sources, the State Administration for Market Regulation recently called in six companies—including Tongwei Co. and GCL Technology Holdings—alongside the sector’s trade association. The regulator instructed them to avoid colluding on production levels, sales, or pricing strategies.

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Following the regulator’s intervention, Tongwei’s stock price dropped over 3% at the opening bell in Shanghai on Friday, while GCL shares fell more than 4% in Hong Kong.

Both Tongwei and GCL declined to provide statements, and the China Photovoltaic Industry Association did not immediately respond to inquiries.

Background on Regulatory Action

This regulatory move follows a year in which China’s polysilicon industry established a fund to allow major players to acquire outdated production capacity from smaller competitors, aiming to address the supply surplus. Anticipation around the fund’s creation led to a spike in polysilicon prices mid-year, and the fund officially launched in December.

Analysts at BofA Global Research, including Gary Tsang, commented that the regulator’s meeting “likely validates our doubts regarding the polysilicon acquisition strategy,” describing the plan as “overly ambitious.”

While the latest developments do not signal a complete breakdown of consolidation efforts, they underscore the difficulties facing an industry grappling with extended losses. Some solar firms have warned that rising polysilicon prices, without corresponding increases elsewhere in the supply chain, are unsustainable.

Looking ahead, analysts predict profits will be more evenly distributed across the solar value chain, rather than concentrated in polysilicon. The industry is also expected to continue raising standards and gradually reducing subsidies, such as export tax rebates.

Key Industry Metrics

• Polysilicon: Prices in China increased by 9.8% to 10.5% during the week ending Wednesday, according to the China Silicon Industry Association.
  • Manufacturers of wafers and cells are incrementally raising their prices, making them more receptive to higher polysilicon costs.
  • China’s annual polysilicon output reached 1.32 million tons, a 28% decrease compared to the previous year.
  • January production is projected at 106,000 tons, down 5% from December.
• Wafers: Prices rose by 8.4% to 9.2% in the week ending Thursday, buoyed by lower output and increased costs.
  • December wafer production totaled 47.7 gigawatts, marking a 14.2% month-on-month decline.

This Week’s Industry Highlights

• Longi Green Energy Technology Co. announced plans to replace silver with base metals in its solar cells, aiming to counteract the rising cost of silver.
• Jinko Solar Co. revealed it has secured a 20.56-megawatt module order from distributors in Australia.

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