The global photovoltaic (PV) industry is currently experiencing a phase of burgeoning growth, yet it grapples with a nuanced landscape of structural adjustmentsAt the heart of this dynamic ecosystem lies polysilicon, a pivotal raw material for the PV industry, whose market trends are under keen observationRecently, the price fluctuations of polysilicon futures have captured the market's attention, particularly following a significant surge in the primary contract on January 15, which reverberated throughout the industry.

On January 15, the polysilicon futures contract showcased a remarkable upward trajectory right from the opening bellThe contract surged past the previously recorded high of 44,000 yuan per ton, a price point reached on its debut trading day, witnessing fluctuations that exceeded a staggering 2%. It concluded the day at an impressive 44,640 yuan, breaking historical records since its listing

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By closing time, the primary contract for delivery in May observed a 1.58% increase, with trading volumes touching 79,200 contracts and open interest rising to 31,000 contracts.

Since its listing on December 26, 2024, polysilicon futures have been in the spotlight regarding their price dynamicsThe dramatic escalation in prices did not occur in isolation; it has coincided with enhanced self-regulation within the industry, spearheaded by the Photovoltaic Association since mid-2024. Leading players such as Tongwei Co., Ltdand Daqo New Energy Corphave initiated orderly upgrades, production cuts, and maintenance announcementsConsequently, the supply-demand equilibrium for polysilicon has seen notable improvement, with weekly production plummeting from 30,000 tons to 21,300 tonsConcurrently, stocks have declined from 290,000 tons to 230,000 tonsInsights from the supply chain depict favorable adjustments in the downstream sector where silicon wafer manufacturers maintain robust inventory reduction and express strong intentions to ramp up production—expectations suggest continued increases in wafer production throughout January

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Conversely, while polysilicon producers are projected to decrease output amidst industry self-discipline and financial losses, the expected reduction scale appears to dwindleOverall, a pattern of reduced supply coupled with increased demand emerges, systematically optimizing the market's supply-demand landscape and bolstering the surge in futures prices.

However, the burgeoning values in the futures market starkly contrast with the dire situation in the spot market for polysiliconCurrently, the spot prices have tumbled below production costs, leading to distressing financial setbacks for several companiesStatistical data reveals that the industry’s average production cost stands at approximately 41.43 yuan per kilogram, while mainstream market prices for key polysilicon materials linger around 31.5 yuanThis disparity underscores the tumultuous conditions faced by producers relying on a business model predicated on more favorable economic conditions.

Despite the global PV installation figures remaining resilient, demonstrating double-digit year-on-year growth, the rapid pace of capacity and output increases within the upstream and midstream segments has plunged the industry into a continual phase of optimization and readjustment

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A significant inventory buildup has consolidated predominantly at upstream levels, whereas downstream entities, including silicon wafer, solar cell, and component segments, are experiencing comparatively lower stock levelsFrom the supply side, although weekly polysilicon production may have seen slight growth, the advent of the self-regulatory production cut agreement past January will likely keep operational rates grounded at lower levelsAdditionally, while prices for silicon wafers have shown signs of recovery and production volumes have begun their ascent as inventories are drawn down, production losses for solar cell manufacturers remain substantialFurthermore, component manufacturers are adopting a cautious approach to production schedules, harboring pessimistic views about the future market landscape.

As we contemplate the outlook for the polysilicon market, it is characterized by complexity

The current stocks of polysilicon have been comparatively high year-on-year; however, a declining trend month-on-month emerges, a shift attributable to sustained reductions from leading firmsAs these cutbacks intensify, the marginal improvements in supply-demand dynamics become increasingly discernibleYet, the languishing end-user demand casts a shadow over market advancements, effectively constraining the potential for price escalations in raw materialsThe sluggish pace of construction projects for downstream PV power stations continues to deter procurement intentions for polysilicon.

In light of the existing market conditions, analysts predict that the short-term futures pricing for polysilicon will likely oscillate within the range of 41,000 to 45,000 yuan, marking a lean toward stabilization overallFor investors, a mid-to-short-term strategy focused on accumulating positions during price dips presents a favorable approach

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On one hand, intensified production cuts from major players are contributing to marginal improvements in supply-demand balanceOn the other, prospects from downstream wafer manufacturers show promising inventory reductions coupled with an eagerness for output increases, while polysilicon producers—facing ongoing financial pressure—may adopt further scaling back measuresFollowing the festive period, an uptick in market activity may enhance the potential for synchronicity between spot and futures markets.

However, taking a broader perspective reveals that the polysilicon industry is grappling with severe overcapacity issuesOperational rates are projected to hover around a mere 30% during December 2024 and January 2025, with significant capital investment associated with expanding capacity hindering swift adjustmentsThis transition to a more balanced operational output will necessitate a protracted adjustment timeline.

Additionally, it is imperative to highlight recent developments in the silicon wafer market