- Supply Side: The Tug-of-War Between Resumption and Reduction, Exacerbating Overcapacity
- Regional Capacity Differentiation
Northwest's False Reduction: Although major Xinjiang manufacturers claim production cuts (currently 114 furnaces operating), the actual shutdowns primarily involve inefficient capacity. Leading enterprises continue to release new capacity, maintaining a monthly output of over 70,000 tons.
Southwest's Undercurrent of Resumption: Yunnan and Sichuan have added 23 operating furnaces (12 in Yunnan, 11 in Sichuan). During the high-water season, electricity prices have dropped to 0.3 RMB/kWh, allowing cash costs to be compressed to 33,000 RMB/ton, incentivizing smaller manufacturers to resume production.
Overall Output Remains High: Polysilicon production is estimated at 100,000 tons in April and may increase to 110,000 tons in May, with supply-side pressure continuing to intensify in the second quarter.
- Cost Pressure and Capacity Inertia
Cash Flow Breaching the Bottom Line: The current ex-tax cash cost of polysilicon is approximately 33,000 RMB/ton, and the inclusive-tax cost is 37,000-38,000 RMB/ton. In contrast, the main contract price has fallen to 36,000 RMB/ton, with forward-month contracts even dropping below 34,000 RMB/ton.
Industry Self-Regulation: "Paper Reductions": The industry self-regulatory agreement signed in December has limited binding force. Leading enterprises still maintain an operating rate exceeding 50%, and high inventory (392,000 tons across the industry) forces companies to "trade volume for cash."
- Demand Side: Photovoltaics, Semiconductors, and Exports All Stalling
- Cliff-like Decline in Photovoltaic Demand
End of Rush Installation: Following the "430" rush installation deadline, component production is projected to plummet from 68GW in April to 58GW in May. Silicon wafer procurement demand is declining in parallel, reducing monthly polysilicon consumption by 15,000 tons.
Negative Feedback Loop in the Industrial Chain: Component prices have fallen to 0.71 RMB/watt (a weekly decrease of 6%). Wafer manufacturers are shifting their procurement strategy to "digesting inventory + price-driven replenishment," with N-type material transaction prices secretly dropping to 37 RMB/kg (5 RMB lower than quoted prices).
- 2. Semiconductors and Exports Unable to Sustain the Market
High-purity silicon for semiconductors accounts for less than 5% of demand, and import substitution is progressing slowly due to US technology blockades.
Overseas Market Setbacks: The US is imposing port fees on Chinese vessels, and the EU's "Anti-Forced Labor Law" has taken effect. 1 Component exports in January-March decreased by 1% year-on-year, and transshipment routes through Southeast Asia are obstructed.
III. High Inventory Pressure: A 400,000-Ton "Dam" Hanging Overhead
- Deteriorating Inventory Structure
Surging Visible Inventory: As of April 21st, visible polysilicon inventory reached 392,000 tons (including raw material inventory at wafer manufacturers), enough to cover global demand for three months. Deliverable inventory accounts for over 60% of this, suppressing the liquidity of near-month contracts.
Hidden Inventory Risks: Downstream wafer manufacturers' raw material inventory is only sufficient for half a month, but previously high-priced inventory has not been fully digested, and the willingness to replenish stock has plummeted.
- Prolonged Destocking Cycle
The current average monthly destocking rate is less than 10,000 tons. If there is no substantial improvement in demand, it will take more than three years to digest the inventory, far exceeding the industry's tolerance limit.
- Price Trends: The Life-and-Death Struggle After Breaching the Cost Line
- Short-Term Price Bottom Testing
The estimated value of the main 2506 contract is expected to fall to 36,000 RMB/ton, and forward-month contracts may drop to 34,000 RMB/ton (corresponding to an N-type material price of 35 RMB/kg), forcing the exit of high-cost capacity in the Southwest.
- Policy Intervention and Market Clearing
Illusion of Policy Support: A "benchmark price" initiative was proposed at the April industry conference, but with high inventory levels, companies' "secret price reductions for shipments" are difficult to curb, casting doubt on the effectiveness of the policy.
Capacity Clearing Threshold: If prices continue to remain below the cash cost for three months, 30% of small and medium-sized capacity may be forced to exit. However, leading enterprises, leveraging their financing advantages, may initiate a "price war of attrition."
- Breakthrough Paths: Technological Iteration and Globalization
- Structural Opportunities for N-type Material
The penetration rate of N-type silicon wafers has exceeded 40%, and the rigid demand for high-quality material is becoming prominent. The price difference between N-type and P-type material may widen to 8-10 RMB/kg, forcing companies to accelerate technological upgrades.
- Overseas Capacity Layout
North Africa and the Middle East as New Springboards: Leveraging local low electricity prices (0.2 RMB/kWh) and tariff advantages for exports to the US, leading enterprises are accelerating the construction of 100,000-ton-level overseas bases.
Conclusion: Survival Rules in the Darkest Hour
The polysilicon industry is experiencing an "ice age": under the triple strangulation of 400,000 tons of high inventory pressure, a prolonged period of demand vacuum, and the collapse of the cost defense line, only "cash is king + technological positioning" can ensure survival. Historical experience shows that capacity clearing is often accompanied by a bloody price war, but after every winter, the survivors will ultimately dominate the new era.
Source：https://mp.weixin.qq.com/s/OIO-fIHUY7ZQoFr4DBWCZQ
