Regarding the rumors of reduced production and shutdowns in battery and component factories in Southeast Asia, Longi Green Energy responded to a Caixin journalist's inquiry that specific details are still being discussed with overseas business partners. The US may continue to launch another round of anti-dumping and countervailing duty investigations on Southeast Asian photovoltaic products, making it more difficult for the export of Southeast Asian photovoltaic products to the US.
On ****, Caishen reported (by Liu Mengran) that a spokesperson from the securities department of Longi Green Energy (601012.SH) responded to Caishen reporters that they were still communicating with overseas business regarding rumors about Southeast Asian battery and module manufacturers experiencing production cuts and shutdowns. The specific impact of the re-initiation of the "double reverse" investigation in the United States has not been properly assessed.
According to insider sources, Longi Green Energy's module factory in Malaysia began to gradually shut down this week, while earlier, five production lines at Longi's Vietnamese battery cell factory had already shut down.
Longi Green Energy has not yet made an official response to the above news. Under the restrictions of the "double reverse" policy in the United States, Longi Green Energy was one of the earliest module factories to set up solar capacity in Southeast Asia, with products mainly exported to the United States. According to the 2023 financial report, the company's 2.8GW component project in Malaysia and 3.35GW battery project in Vietnam have been gradually put into operation according to schedule, while the 6.6GW silicon bar project in Malaysia is progressing in an orderly manner.
As the largest photovoltaic component factory, Longi Green Energy has had many twists and turns in exporting its products to the US market. At Longi Green Energy's 2023 and Q1 2024 earnings conference held on April 30th of this year, Chairman of Longi Green Energy, Zhong Baoshen, stated that previously, Longi's products were unable to enter the US market, resulting in a certain amount of lost orders, but after a difficult process, Longi's channel to enter the US market has been streamlined, and US Customs has accepted Longi's new planned supply chain pathway. Zhong Baoshen estimated that the US market for Longi Green Energy will see significant improvement in the second half of this year.
However, there are still variables to consider. In 2022, the US Department of Commerce initiated an anti-evasion inquiry on solar products from four countries: Malaysia, Thailand, Vietnam, and Cambodia, by applying a rollback tax rate of 24 months. The investigation is set to expire this June.
On May 16th of this year, the White House issued a statement claiming that it will take further control measures on imported photovoltaic cells on grounds of so-called unfair trade. Industry insiders expect that the US may continue to initiate a new round of "double reverse" investigations into Southeast Asian photovoltaics. If there are acts of dumping and other similar situations, photovoltaic products in Southeast Asia will be subject to high tariffs.
A spokesperson from a major component factory told Caishen reporters that the company has indeed made some adjustments to the operating rate of its Southeast Asia base, but due to the impact of overall market conditions, it may not be entirely related to the new round of "double reverse" policy. Previously, due to high tariff restrictions on domestic photovoltaic products, there were basically no direct exports to the United States. The new trade policy is not yet fully implemented, involving rules such as retrospective and rolling tax rates, which are quite complicated.
Some industry analysts believe that if Southeast Asian photovoltaic products are no longer exported to the United States, top manufacturers may seek out new investment destinations, such as the Middle East, to avoid related risks. However, the spokesperson stated that it is still too early to transfer production capacity to the Middle East, but they will pay close attention to the situation.
It should be noted that the United States is one of the regions with the highest demand for photovoltaic installations, and domestic component factories are still exploring solutions for this market. According the Longi Green Energy, the company's 5GW module joint venture factory in the US began production in Q1 of 2024 and is already shipping products. In addition, JA Solar Technology (002459.SZ), Trina Solar Co., Ltd. (688599.SH), JinkoSolar (688223.SH), and Attes (688472.SH) have all proposed plans to build factories in the US.
Affected by production capacity iteration and insufficient demand, the photovoltaic industry is currently at the bottom of this cycle. Prices of products at each level are at historical lows and have fallen below cash costs, and work rates at each level are generally declining.
Due to factors such as extreme low prices leading to devaluation of inventory and other factors, Longi Green Energy suffered a loss of 942 million yuan in Q4 last year, with profits turning into losses. In Q1 this year, the loss further expanded to 2.35 billion yuan.