polysilicon

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>I. Price Trends
>- Futures Market: At noon on March 19, 2026, the main polysilicon futures contract on the Guangzhou Futures Exchange closed at RMB 38,950/ton, breaking below the psychological threshold of RMB 40,000/ton and hitting a new all-time low since its listing. On March 24, the PSi2606 contract closed at RMB 37,390/ton, down 2.20% from the previous trading day.
>- Spot Market: The lowest transaction price for N-type dense material has declined to RMB 39,000/ton, fully breaching the industry’s mainstream cash cost floor (approximately RMB 37,000–38,000/ton).
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>II. Supply-Demand Balance
>- Supply Side:
> - Nominal capacity has surpassed 3 million metric tons (MT), yet actual effective output is expected to remain between 2.2 and 2.4 million MT amid persistently low prices.
> - Capacity utilization has plummeted to 32.83%, with nearly 70% of capacity idle. Leading enterprises are adopting measures—including production curtailment, scheduled maintenance, and commodity reserve platforms—to support market pricing.
> - Granular silicon technology penetration has risen to 30%, with its cash cost reduced to as low as RMB 27,000/ton—exerting strong competitive pressure on the traditional modified Siemens process, accelerating upgrades or phase-outs of legacy capacity.
>- Demand Side:
> - Global photovoltaic (PV) installed capacity additions are projected to reach 500 GW in 2026; however, China’s newly installed capacity is expected to decline by 20% year-on-year to 224 GWac, primarily due to electricity pricing reform, mounting energy storage cost pressures, and adjustments to export VAT rebate policies.
> - Penetration of N-type cell technology has surged to over 85%, significantly increasing demand for high-purity N-type polysilicon feedstock. Conversely, inventory of lower-grade P-type material remains severely overstocked.
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>III. Inventory Pressure
>- Social inventory stands at 510,000 MT—equivalent to roughly five months of industry-wide consumption—indicating acute visible inventory pressure.
>- Total industry inventory is approximately 391,800 MT, showing a slight drawdown trend; however, the futures market is increasingly functioning as an “inventory reservoir,” helping alleviate on-site inventory pressure across the industrial chain.
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>IV. Policy & Market Environment
>- Export VAT Rebate Cancellation: Effective April 1, 2026, VAT export rebates for PV products will be abolished. For solar cells specifically, the rebate rate will be phased down to 6% and fully eliminated by 2027—eroding overseas price competitiveness.
>- Continuation of Anti-Dumping Duties: Anti-dumping duties on solar-grade polysilicon originating from the United States and South Korea will remain in force for another five years, safeguarding domestic polysilicon market stability.
>- Industry Self-Regulation & Reserve Mechanisms: Formal “price alliances” among leading firms have been suspended; however, coordinated efforts via reserve platforms are advancing capacity consolidation, lifting industry concentration (CR5) above 85%.
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>Analysis & Assessment
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>I. Sustained Downward Price Pressure
>- Current prices have fallen below the cash cost floor for most producers, pushing the industry into a brutal “survival-of-the-least-unprofitable” consolidation phase.
>- The cancellation of export VAT rebates will further compress margins, accelerating the exit of smaller, less-efficient capacities, while top-tier enterprises—backed by superior cost structures—consolidate pricing power.
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>II. Pronounced Structural Imbalance
>- Robust demand for high-quality N-type feedstock coexists with severe overstocking of low-grade P-type material, potentially widening the price spread between the two grades to over RMB 15/kg.
>- Granular silicon technology, backed by significant cost advantages, continues gaining traction—intensifying technological competition and compelling rapid modernization or retirement of modified Siemens process facilities.
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>III. Policy-Market Interplay
>- In the short term, the removal of export rebates exacerbates industry stress; in the longer term, it may catalyze innovation-driven upgrades and strategic overseas manufacturing deployment.
>- While self-regulatory mechanisms and reserve initiatives help avoid monopolistic risks, weak enforcement could undermine policy effectiveness and hinder meaningful price recovery.
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>Outlook
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>I. Price Trend Forecast
>- Short Term (Q2 2026): Prices are likely to consolidate near the bottom, with a potential floor range of RMB 40,000–43,000/ton. Accelerated capacity rationalization may trigger short-term extreme downside volatility.
>- Medium Term (Q3–Q4 2026): With hydropower-rich Southwest regions resuming operations during the flood season and peak overseas seasonal demand emerging, prices may stabilize after initial downward adjustment, trending modestly upward. The full-year neutral price range is projected at RMB 50,000–70,000/ton, with a central estimate of RMB 60,000/ton.
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>II. Supply-Demand Outlook
>- Supply Side: Nominal capacity expansion is decelerating; effective capacity utilization is expected to rebound to over 80%, while CR5 concentration is forecast to exceed 95%.
>- Demand Side: Continued growth in global PV installations will drive polysilicon demand to 900,000–1,300,000 MT by 2030, with N-type feedstock accounting for 100% of total demand.
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>III. Technological Evolution
>- Granular silicon technology is poised to capture ~50% of the market by 2028, with production costs projected to fall more than 30% below those of the modified Siemens process.
>- Pilot applications of Carbon Capture, Utilization, and Storage (CCUS) technologies, coupled with full green electricity supply, will reduce polysilicon’s carbon footprint—enhancing compliance with evolving international trade sustainability standards.
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>IV. Risk Alerts
>- Actual overseas order contraction following the export VAT rebate cancellation may exceed expectations, triggering further demand deterioration.
>- Slower-than-anticipated capacity rationalization could prolong price depression, deepening industry-wide losses.
>- Accelerated technological obsolescence may hasten the retirement of outdated assets, worsening corporate balance sheets.