On Friday, the new energy sector continued to rise, with the photovoltaic concept, BC battery, and energy storage sectors trending higher.

As of the time of publication, the photovoltaic equipment sector has risen by more than 2%, with SinoTech Energy up by the daily limit of 20%, Jiangsu GoodWe Power Supply Technology Co., Ltd. up more than 14%, Ginlong Technologies up more than 12%, and Hemai Stock, De Ye Stock, Sungrow Power Supply, and Sineng Electric all rising sharply.

Since the beginning of this week, the photovoltaic sector has started to rebound and has risen by more than 7% during the week.

In terms of capital flow, the net inflow of the photovoltaic equipment sector is leading, with a net inflow of more than 1 billion yuan at present.

Is the industry embracing change?

Recently, the Ministry of Industry and Information Technology issued the "Regulatory Conditions for the Photovoltaic Manufacturing Industry (2024 Edition)" and the "Regulatory Notice Management Measures for the Photovoltaic Manufacturing Industry (2024 Edition)" (draft for comments).

It explicitly proposes to guide photovoltaic enterprises to reduce photovoltaic manufacturing projects that simply expand capacity, strengthen technological innovation, improve product quality, and reduce production costs.

For newly-built and expansion projects in the photovoltaic manufacturing industry, the minimum proportion of capital contribution is 30%.

As the policies guide the transformation of the photovoltaic industry, it will promote the concentration of resources to high-quality enterprises and effectively accelerate the process of eliminating backward production capacity.

Previously, the National Energy Administration also stated that the competition in the Chinese photovoltaic industry is indeed very fierce, and it will reasonably guide the construction and release of photovoltaic upstream production capacity to avoid the duplication of low-end production capacity.

Recently, photovoltaic manufacturers have experienced a collective "hemorrhage", and mid-year performance reports are dismal.

Due to the imbalance of supply and demand in the industry, "significant losses" have become a common phenomenon. Among the disclosed performance forecasts of photovoltaic companies, at least eight leading companies have a maximum loss of over 1 billion yuan in H1.

Among them, Longi Green Energy Technology predicted a loss of 4.8-5.5 billion yuan, while its net profit in the same period last year was 9.178 billion yuan.

In this downward cycle of the industry, "rising quantity and falling prices" are the main impact factors.

Zhu Gongshan, chairman of Xinjiang Goldwind Science & Technology Co, Ltd., pointed out in late June that the price war in the photovoltaic monocrystalline silicon industry chain is very fierce.

As of now, the four major main materials of the photovoltaic industry, silicon materials, silicon wafers, batteries, and components, have basically fallen below the cash cost, and the entire industrial chain is under pressure.

Market data shows that in the first half of the year, among the four major materials of the photovoltaic industry, the price of silicon materials has dropped by more than 40%, and the price of silicon wafers has also fallen by more than 30%. Compared with the peak of last year, the two have fallen by more than 80%.

In addition, the prices of battery cells and modules have also dropped by at least 15% this year, shrinking by nearly 60% compared with last year's peak.

Is the photovoltaic inflection point approaching?

The profitability of the entire industrial chain continues to be under pressure. When will the industry rebound?

Zhong Baoshen, chairman of Longi Green Energy, recently stated that with the current competitive situation, prices may stabilize or slightly rise in about three months.

"2024 will be a very difficult year for the company, as well as for the industry. In 2025, the company will enter the recovery phase ahead of the photovoltaic industry."

Market analysts also believe that the bottoming out of profits indicates that the inflection point is approaching, but it also shows that the real capacity clearing will gradually begin in the second half of the year.

Lyu Jinbiao, the joint secretary-general of the SEMI China Photovoltaic Standards Committee, pointed out that the photovoltaic industry will be adjusted within this year, and adjustment signals will be seen in the third quarter.

"The adjustment of the industry chain will first be reflected in the polycrystalline silicon end, and companies will reduce the load through flexible production by arranging production lines with relatively high costs for maintenance and shutdown, thereby easing inventory pressure."

In order to survive the cycle, photovoltaic companies are also increasing their investment in technological innovation, coupled with the boost from policy side, what will be the future trend of the photovoltaic industry?

Everbright Securities believes that the revision is intended to further guide photovoltaic manufacturing project investment to reduce the single production capacity of photovoltaic enterprises, while further improving the project technology and energy consumption management requirements.

Against the background of sustained decline in photovoltaic product prices, companies in various links of the main industry chain are facing severe operating pressures. Leading companies with cost and technology advantages are expected to occupy a leading position in the industry's capacity clearing.

However, Cinda Securities also pointed out that the photovoltaic industry still maintains a relatively fierce competitive situation. After the large-scale expansion of the industry in 2023, the short-term trend of capacity optimization and clearing in the photovoltaic industry has not changed, and various links in the main industry chain face great pressure on profitability.

Under this background, enterprises with sufficient funds and obvious technological advantages are expected to survive the cycle, but at present, there is still only the possibility of a short-term rebound, and long-term reversal still requires continuous optimization of the industry side.