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Reuters
7 days ago
- Business
- Reuters
Exclusive: China polysilicon firms plan $7 billion fund to shut a third of industry capacity
BEIJING, Aug 1 (Reuters) - Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings ( opens new tab said. The top polysilicon producer told Reuters on Thursday plans were being discussed to acquire and shut at least 1 million metric tons of lower-quality polysilicon capacity. "It is sort of like the OPEC of the polysilicon industry, wherein total supply for a specified timeframe has to be agreed by the central committee and production quotas to be allocated to producers," GCL's investor relations director Jun Zhu said. The plan is one of the strongest signals yet that the heightened rhetoric against overcapacity rolled out by the Chinese government this month is translating into action. Chinese industries, from solar to electric vehicles, are grappling with massive overcapacity and vicious price wars that are wiping out profits. Beijing restructured industries including polysilicon, steel and cement in previous waves of reforms more than a decade ago. However, this latest round is expected to be more difficult given many of the problem sectors are now filled with private firms and there are fewer growth sectors to pick up the slack. The polysilicon acquisition vehicle would be launched late in the third quarter of this year and would start making purchases in the fourth quarter, both of excess capacity and of market inventories, Zhu said. The proposed closures would leave approximately 2 million tons of capacity remaining in the market, he added. China's production capacity was 3.25 million tons at the end of 2024, according to Bernreuter, an industry research group. GCL Chairman Zhu Gongshan said at an industry conference in June that major firms were working to restructure the industry, while local media Caixin reported producers were in talks to create an acquisition fund. Reuters is reporting the size, scope and timing of the plan for the first time. China's state planner, the National Development and Reform Commission, did not immediately respond to a request for comment. China has a near-monopoly over solar-grade polysilicon, producing 95% of the world's total in 2024, according to Bernreuter. China's share of the rest of the solar supply chain, including cells, modules and wafers has also reached over 80% in recent years. Polysilicon prices are up nearly 70% this month, alongside a range of other industrial commodities as Beijing's rhetoric, plus smaller initiatives from various ministries and provincial governments led markets to bet supply side reform was on the way. It is unclear where the money to finance the vehicle would come from given major players GCL and Tongwei ( opens new tab are losing money. "No one knows how the capacity acquisition will be implemented, because there's no past experience to refer to," said UBS analyst Yishu Yan, adding that most of the companies in the sector are indebted. Also unclear is how active a role the provincial and central governments will play in the vehicle and the factory closures it plans to make. Jun Zhu said the vehicle's central committee would be made up of producers, lenders and potentially regulators, without specifying who they would be. Local governments are increasingly expected to fall in line with restructuring plans given signals this week that the highest levels of China's government are determined to combat price wars, Yan of UBS said on Friday, even though local officials might privately balk at the employment and GDP impacts of plant closures. Top Chinese leaders called again for disorderly competition among enterprises to be reined in, including tightening oversight of local governments' investment promotion practices, at a meeting on Wednesday of the Politburo, a top decision-making body of the Communist Party whose July gathering typically sets the economic tone for the rest of the year. Involution is a term widely used in China to describe a situation where intense competition leads to diminishing returns. "My own feeling is that the anti-involution campaign has been escalated" after the Politburo meeting, Yan said. "It will be politically incorrect to still push back." Yan had previously said any plan to shut capacity may face opposition from local governments, where officials are scored on jobs and economic growth. Many of these governments also have stakes in local private solar firms. "If the solar companies are facing bankruptcy or to be acquired, there could be some pushback by the local governments," she said in an interview in mid-July. Natixis economists, in a note on Friday on China's anti-involution drive, cautioned that mergers and acquisitions alone may not shrink investment in renewables by enough to fix oversupply. "All in all, it seems quite clear that the very large number of zombie renewable companies needs to shrink, possibly via defaults. If social stability is too important for such clean-up to happen, the mergers and acquisitions - the Chinese government seems to be willing to push - need to bring about a massive reduction in capacity for this sector to see the light at the end of the tunnel," the economists wrote. ($1=7.15 yuan)
Yahoo
7 days ago
- Business
- Yahoo
China Polysilicon Makers Plan $7 Billion Fund to Ease Glut
(Bloomberg) -- Chinese polysilicon makers are planning to set up a fund to retire production units of the key element used for solar panels, in an effort to ease the industry's overcapacity. The World's Data Center Capital Has Residents Surrounded An Abandoned Art-Deco Landmark in Buffalo Awaits Revival We Should All Be Biking Along the Beach Budapest's Most Historic Site Gets a Controversial Rebuild San Francisco in Talks With Vanderbilt for Downtown Campus Companies including GCL Technology Holdings Ltd. would use the fund of at least 50 billion yuan ($7 billion) to buy and shut down more than one million tons of polysilicon capacity, GCL's Investor Relations Director Jun Zhu said in an interview on Thursday. The plan, which industry leaders have been mulling for months, would help reduce almost one third of China's polysilicon capacity. The market for the material has been struggling through a severe glut. According to data from the China Photovoltaic Industry Association, the country had a total of 3.23 million tons of capacity at the end of 2024, about twice this year's projected demand. The fund is expected to launch late in the third quarter, and China's problem with overcapacity should be fixed by the end of the year, Zhu said. Involution Rhetoric The Chinese government has recently ramped up its rhetoric against so-called involution, a state of hyper-competition that yields ever-diminishing returns in industries such as solar. The Communist Party's decision-making Politburo has vowed to work on the issue across key industries, as the campaign becomes a policy focus for the country's top leadership. Although Beijing has yet to release concrete policy measures, markets are betting that a tougher official stance will turn the situation around. For the polysilicon sector specifically, stricter requirements on energy intensity might help producers deal with overcapacity, according to Yan Dazhou, a director with the national lab for polysilicon material technology. China has asked local governments to review energy conservation measures at polysilicon producers, and submit their reports to the central government before Sept. 30, according to a notice from the Ministry of Industry and Information Technology on Aug. 1. Solar-grade polysilicon prices have risen 21% in the past three weeks to $6.77 a kilogram on Wednesday, the highest level since April 2024, according to PV InfoLink. (Updates with details in sixth and seventh paragraphs) Burning Man Is Burning Through Cash Russia Builds a New Web Around Kremlin's Handpicked Super App Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Cage-Free Eggs Are Booming in the US, Despite Cost and Trump's Efforts ©2025 Bloomberg L.P. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Reuters
31-07-2025
- Business
- Reuters
Exclusive: China polysilicon firms plan $7 bln fund to shut a third of industry capacity
BEIJING, July 31 (Reuters) - Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings ( opens new tab said. The top polysilicon producer told Reuters on Thursday plans were being discussed to acquire and shut at least 1 million metric tons of lower-quality polysilicon capacity. "It is sort of like the OPEC of the polysilicon industry, wherein total supply for a specified timeframe has to be agreed by the central committee and production quotas to be allocated to producers," GCL's investor relations director Jun Zhu said. The plan is one of the strongest signals yet that the heightened rhetoric against overcapacity rolled out by the Chinese government this month is translating into action. Chinese industries, from solar to electric vehicles, are grappling with massive overcapacity and vicious price wars that are wiping out profits. Beijing restructured industries including polysilicon, steel and cement in previous waves of reforms more than a decade ago. However, this latest round is expected to be more difficult given many of the problem sectors are now filled with private firms and there are fewer growth sectors to pick up the slack. The polysilicon acquisition vehicle would be launched late in the third quarter of this year and would start making purchases in the fourth quarter, both of excess capacity and of market inventories, Zhu said. The proposed closures would leave approximately 2 million tons of capacity remaining in the market, he added. China's production capacity was 3.25 million tons at the end of 2024, according to Bernreuter, an industry research group. GCL Chairman Zhu Gongshan said at an industry conference in June that major firms were working to restructure the industry, while local media Caixin reported producers were in talks to create an acquisition fund. Reuters is reporting the size, scope and timing of the plan for the first time. China's state planner, the National Development and Reform Commission, did not immediately respond to a request for comment. China has a near-monopoly over solar-grade polysilicon, producing 95% of the world's total in 2024, according to Bernreuter. China's share of the rest of the solar supply chain, including cells, modules and wafers has also reached over 80% in recent years. Polysilicon prices are up nearly 70% this month, alongside a range of other industrial commodities as Beijing's rhetoric, plus smaller initiatives from various ministries and provincial governments led markets to bet supply side reform was on the way. It is unclear where the money to finance the vehicle would come from given major players GCL and Tongwei ( opens new tab are losing money. "No one knows how the capacity acquisition will be implemented, because there's no past experience to refer to," said UBS analyst Yishu Yan, adding that most of the companies in the sector are indebted. Also unclear is how active a role the provincial and central governments will play in the vehicle and the factory closures it plans to make. Jun Zhu said the vehicle's central committee would be made up of producers, lenders and potentially regulators, without specifying who they would be. Yan at UBS said any plan to shut capacity may face opposition from local governments, where officials are scored on jobs and economic growth. Many of these governments also have stakes in local private solar firms. "If the solar companies are facing bankruptcy or to be acquired, there could be some pushback by the local governments," she said. ($1=7.15 yuan)
Yahoo
31-07-2025
- Business
- Yahoo
Exclusive-Top China polysilicon firms plan to shut a third of production capacity, set OPEC-style output quotas, GCL says
By Colleen Howe BEIJING (Reuters) -Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings said. The top polysilicon producer told Reuters on Thursday plans were being discussed to acquire and shut at least 1 million metric tons of lower-quality polysilicon capacity. "It is sort of like the OPEC of polysilicon industry, wherein total supply for a specified timeframe has to be agreed by the central committee and production quotas to be allocated to producers," GCL's investor relations director Jun Zhu said. The plan is one of the strongest signals yet that the heightened rhetoric against overcapacity rolled out by the government this month is translating into action. Chinese industry, from solar to electric vehicles, is grappling with massive overcapacity and vicious price wars that are wiping out profits. GCL Chairman Zhu Gongshan said at an industry conference in June that major firms were working to restructure the industry, while local media reported producers were in talks to create an acquisition fund. Reuters is reporting the size, scope and timing of the plan for the first time. State planner the National Development and Reform Commission did not immediately respond to a request for comment. The proposed closures would leave approximately 2 million tons of capacity remaining in the market, Jun Zhu said. China's production capacity was 3.25 million tons at the end of 2024, according to figures from consultancy Bernreuter Research, indicating the proposed closures would comprise some 38% of capacity. President Xi Jinping in early July called for an end to "disorderly price competition," and three days later the industry ministry pledged to calm price wars and retire outdated production capacity during a meeting with solar industry executives. This rhetoric, combined with initiatives from various ministries and provincial governments have sent prices of industrial commodities soaring in recent weeks in anticipation of supply side reforms. Polysilicon prices are up nearly 70%. The platform would be launched in the late third quarter of 2025 and would start making purchases in the fourth quarter, both of excess capacity and of market inventories, Jun Zhu said. The fund's central committee, tasked to "make sure polysilicon prices fluctuate at a price range beneficial to all stakeholders", would be made up of polysilicon producers, platform creditors, and potentially regulators, he said. ($1=7.15 yuan) Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Reuters
31-07-2025
- Business
- Reuters
Exclusive: Top China polysilicon firms plan to shut a third of production capacity, set OPEC-style output quotas, GCL says
BEIJING, July 31 (Reuters) - Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings ( opens new tab said. The top polysilicon producer told Reuters on Thursday plans were being discussed to acquire and shut at least 1 million metric tons of lower-quality polysilicon capacity. "It is sort of like the OPEC of polysilicon industry, wherein total supply for a specified timeframe has to be agreed by the central committee and production quotas to be allocated to producers," GCL's investor relations director Jun Zhu said. The plan is one of the strongest signals yet that the heightened rhetoric against overcapacity rolled out by the government this month is translating into action. Chinese industry, from solar to electric vehicles, is grappling with massive overcapacity and vicious price wars that are wiping out profits. GCL Chairman Zhu Gongshan said at an industry conference in June that major firms were working to restructure the industry, while local media reported producers were in talks to create an acquisition fund. Reuters is reporting the size, scope and timing of the plan for the first time. State planner the National Development and Reform Commission did not immediately respond to a request for comment. The proposed closures would leave approximately 2 million tons of capacity remaining in the market, Jun Zhu said. China's production capacity was 3.25 million tons at the end of 2024, according to figures from consultancy Bernreuter Research, indicating the proposed closures would comprise some 38% of capacity. President Xi Jinping in early July called for an end to "disorderly price competition," and three days later the industry ministry pledged to calm price wars and retire outdated production capacity during a meeting with solar industry executives. This rhetoric, combined with initiatives from various ministries and provincial governments have sent prices of industrial commodities soaring in recent weeks in anticipation of supply side reforms. Polysilicon prices are up nearly 70%. The platform would be launched in the late third quarter of 2025 and would start making purchases in the fourth quarter, both of excess capacity and of market inventories, Jun Zhu said. The fund's central committee, tasked to "make sure polysilicon prices fluctuate at a price range beneficial to all stakeholders", would be made up of polysilicon producers, platform creditors, and potentially regulators, he said. ($1=7.15 yuan)
