Longi Slumps as Another Year of Loss Looms

• Longi slumps on fresh loss warning, but a 2026 price rebound beckons. Cost relief and a silver-to-base-metal shift hint at margin repair as China tames overcapacity; Tongwei also bleeds.

Longi Green Energy shares fell as much as 5% in Shanghai after warning of another loss in 2025. Preliminary guidance pegs a net loss of 6–6.5 billion yuan, narrowing from 2024’s 8.6 billion, as low panel prices and Q4 spikes in silver and polysilicon costs persist.

Analysts see an earnings recovery as China reins in overcapacity and price wars; higher panel prices are expected from 2026. Longi plans to shift from silver to cheaper base metals in Q2 to bolster margins. Polysilicon leader Tongwei guided to a 2025 net loss of 9–10 billion yuan versus 7.04 billion in 2024; its shares slid up to 5.7%.

How soon could China’s capacity cuts lift panel prices and sector margins?

• Base case: panel prices stabilize in late 2025 and begin a broader, sustained rise in early 2026 as closures and utilization cuts bite.
• Sequence: upstream relief first (polysilicon spreads firming by H2 2025), then wafers/cells, with module margins lagging into 2026.
• Triggers to watch in 2025: enforced credit curbs on loss-making lines; delayed or canceled high-efficiency capacity; consolidation/asset auctions clearing older kit; tighter checks on power and land subsidies.
• Evidence that the turn is near: weekly module quotes flattening, inventory days trending down, domestic tender prices stopping sequential declines, and fewer below-cost export offers.
• Margin uplift cadence: small improvement Q4 2025, more visible expansion through 2026; sector-level ROE normalization more likely in 2027 if new-builds remain restrained.
• Policy swing factors: stricter capacity-swap rules and “efficiency floors” could pull forward recovery; lax enforcement or local support for legacy plants would push it out.
• Demand-side supports: robust utility-scale build in Asia/Middle East and U.S. storage-paired projects can absorb supply in 2026; weaker European orders would delay pricing power.
• Technology effects: rapid silver thrifting and materials substitution temper price rises but improve unit margins; a fresh capex wave into next-gen cell lines would reset the clock.
• Trade/regulatory risks: new tariffs or subsidy probes can re-route flows and create regional price splits, potentially delaying a global margin recovery even if China tightens.
• Net takeaway: meaningful, sector-wide margin recovery is most plausible from 2026, with 2025 marking the trough and initial stabilization if announced cuts are executed and enforced.