Is the polysilicon plate expected to sail?

Abstract The growth in the installed capacity of photovoltaic power plants has created new demands for the development of photovoltaic cell components, particularly in the polysilicon sector. As a result, over the past year—especially since the third quarter of this year—polysilicon prices in China have started to rebound. This trend reflects a broader recovery in the solar energy industry, which has been through cycles of boom and bust in recent years. The industry has significantly improved its technological capabilities, leading to reduced costs for photovoltaic components and increased efficiency in power generation. These advancements have enabled solar energy to compete more effectively with traditional power sources, resulting in a notable decline in the cost of photovoltaic electricity. This cost reduction is expected to further drive the expansion of solar installations worldwide. This phenomenon is not limited to China but is also evident in North America, Europe, and other regions. The growing demand for photovoltaic systems continues to fuel the need for polysilicon, which has seen a 12% price increase according to PVInsights. Domestic polysilicon producers are currently maintaining prices at around 135 yuan/kg, which is expected to greatly improve their profit margins. At present, polysilicon is one of the weakest links in the supply chain, but with improved downstream cash flow and the launch of domestic solar projects, prices are anticipated to continue rising. This development is a strong positive signal for listed companies in the polysilicon sector. Following the industry downturn, many small-scale polysilicon producers have exited the market due to financial difficulties, leading to increased market concentration. Larger players have managed to survive and even expand production capacity, leveraging their strong connections and operational efficiency. As a result, leading listed companies now hold a larger share of the market and are highly sensitive to changes in polysilicon prices. A slight recovery in prices can lead to a rapid improvement in their profitability, which could drive stock prices higher. For example, a U.S.-listed renewable energy company with nearly 10,000 tons of polysilicon production capacity has seen its stock price surge from $10 per share in August to $41 per share last week. This performance reflects global investors' optimism about the future earnings potential of polysilicon stocks. Historically, Chinese A-shares have relied on overseas market speculation to boost certain stocks. For instance, the previous surge in E-House China's stock led to a sharp rise in A-share indices. Similarly, the recent rally in the auto after-sales sector saw companies like Yaxia Automobile and Huge Group experience significant gains. With the current upward trend in new energy stocks, it’s likely that A-share investors will increasingly focus on polysilicon-related stocks. Investors are advised to closely monitor developments in the polysilicon sector. Stocks such as Leshan Power, TBEA, and Yijing Optoelectronics are worth tracking, as well as CSG A and King Kong Glass, which may offer moderate investment opportunities. Keeping an eye on these companies could provide valuable insights into the evolving dynamics of the solar energy industry.