Deutsche Bank China Solar Sector: Persisting Losses, Downstream Better Positioned — May 2026 Monthly
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Deutsche Bank's May 2026 monthly solar report highlights that China's solar industry remains in sustained losses, though downstream segments such as modules and inverters are better positioned than upstream polysilicon and wafer producers. Most companies across the value chain continue to report negative gross margins.
Polysilicon and wafer prices kept declining through May, widening losses at upstream producers. In contrast, module and inverter makers demonstrated stronger earnings resilience, supported by relatively stable downstream demand and better cost-pass-through capabilities. Capacity rationalization is accelerating, with lagging capacity expected to exit during the second half of 2026.
While prices appear near a floor, the timing of any meaningful rebound remains uncertain. Policy support is limited, leaving the industry to self-adjust through market mechanisms. Overseas demand continues to grow, though rising trade barriers present a notable risk.
The report maintains Buy ratings on downstream leaders Longi Green Energy and Sungrow Power, citing cost advantages and strong overseas growth respectively. Jinko Solar is rated Hold, as module shipment growth is offset by profitability pressure.
Key charts track polysilicon spot and futures prices, unit cash profit trackers, wafer inventory levels, and annual supply-demand balances. Industry losses may persist through end-2026 before stabilization.
Key exhibits
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