Over 60 percent of listed Chinese photovoltaic firms reported losses in the first six months, hit by weaker demand, excess capacity, high inventory levels and tumbling prices. However, a handful of firms have managed to limit their losses, or even return to profit, by tapping into overseas markets and developing new technologies.

Twenty-three of the 38 listed Chinese solar companies to have released their performance forecasts for the first half as of July 14, posted losses, according to the latest data. And only five are projecting growth. This highlights a deepening divide in performance across the sector.

Silicon material giant Tongwei Group is bracing for a net loss of between CNY4.9 billion (USD683 million) and CNY5.2 billion in the first half. Even though the figure has not worsened considerably from its first-quarter loss of CNY2.5 billion, it is still a significant deficit. Wafer giant TCL Zhonghuan has also seen its losses widen, with a projected net loss of between CNY4 billion and CNY4.5

billion over the period, compared to losses of CNY3 billion a year ago.

However, some companies bucked the trend in the second quarter. Longi Green Energy expects its second-quarter loss to have narrowed by about CNY100 million (USD14 million) from the first quarter to up to CNY1.37 billion (USD190.8 million) thanks to increased shipments of its new HPBC 2.0 modules and cost savings. For the first half, it is forecasting a loss of between CNY2.4 billion (USD334 million) to CNY2.8 billion.

Aiko Solar Energy is bracing for losses of up to CNY280 million (USD39 million) in the first half. This is despite returning to profit in the second quarter, after accruing losses of CNY300 million in the first quarter, thanks to increased sales of its ABC panels in high-value overseas markets.

Drinda’s international sales surged to 51.9 percent of revenue in the first half from 23.8 percent in the same period last year, helping the company narrow its losses in the second quarter.

With the government’s increased emphasis on curbing cut-throat competition, the market’s focus has shifted to the issue of excess capacity in the PV sector and the price wars. Policy support has spurred a rebound in polysilicon futures and spot prices, as well as silicon wafer prices, leading to a partial recovery in the PV sector’s valuation. In the past week, polysilicon prices have surged and prices for wafers and cells have stabilized. Investors are now paying close attention to how the sector performs in the third quarter.

The second half of this year will be a critical period for the industry to clear out excess capacity, an analyst in the emerging electronics industry told Yicai. While policy support is helping push polysilicon prices up, demand from the end market is still weak, so whether prices can keep rising remains uncertain. If production cuts in the third quarter continue, the gap between the performance of different players will likely widen. Companies that focus on technological upgrades and overseas markets will have the best chances of survival.