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, China's polysilicon prices have started to rebound. This trend is not only significant for the domestic market but also reflects broader global developments in the solar energy industry.
After years of fluctuating cycles between prosperity and decline, the photovoltaic industry has significantly enhanced its technological capabilities. On one hand, the cost of producing photovoltaic cells has decreased, while on the other, technological advancements have greatly improved the efficiency of solar power generation. This has enabled photovoltaics to compete more effectively with traditional power sources, leading to a notable reduction in the cost of solar electricity. This cost decline is expected to further drive the expansion of photovoltaic installations worldwide.
This trend is evident not only in China but also in North America, Europe, and other regions. The increasing demand for photovoltaic systems continues to fuel the need for high-quality polysilicon, which is a critical raw material in the production of solar panels. Consequently, polysilicon prices have shown a clear upward trend, with some reports indicating a 12% increase in the price of polysilicon. Domestic producers are currently maintaining prices at around 135 yuan per kilogram, which is expected to significantly improve their profit margins.
Currently, polysilicon remains the weakest link in the entire solar supply chain. However, as downstream cash flow improves and domestic solar projects gain momentum, polysilicon prices are anticipated to continue rising. This development presents a major opportunity for listed companies in the polysilicon sector, offering strong potential for increased profitability and stock performance.
Following the industry downturn in previous years, many small-scale polysilicon manufacturers have exited the market due to financial constraints. This has led to a sharp rise in market concentration, with larger, more established firms surviving the challenging period and even expanding their production capacities. As a result, leading listed companies have gained a stronger market position, making them highly sensitive to fluctuations in polysilicon prices. A slight recovery in prices can lead to rapid improvements in their earnings, which in turn could drive continued stock price increases.
For example, a U.S.-listed new energy company with nearly 10,000 tons of polysilicon production capacity has seen a surge in investor interest as polysilicon prices recover. Market expectations for improved profitability have contributed to a significant rise in the company’s stock price, from $10 per share in August to $41 per share recently. This performance highlights the positive sentiment among global investors regarding the future earnings potential of polysilicon-related stocks.
Historically, A-shares have been influenced by overseas market speculation, with certain stocks experiencing sharp gains following strong performances abroad. For instance, the recent surge in E-House China’s stock had a ripple effect on the broader A-share market. Similarly, the rise in the automotive after-sales sector has driven up shares of companies like Yaxia Automobile and Huge Group. With the growing momentum in the new energy sector, A-share investors may increasingly focus on polysilicon-related stocks.
Investors are advised to closely monitor the development of polysilicon business stocks, with particular attention to companies such as Leshan Power, TBEA, and Yijing Optoelectronics. Additionally, stocks like CSG A and King Kong Glass may also be worth tracking as part of a diversified investment strategy.
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