Author: Zhou Li

Following industrial silicon futures and lithium carbonate futures, the new energy metal varieties sector of the Guangzhou Futures Exchange (hereinafter referred to as the "Guangzhou Futures Exchange") ushered in a new member - polysilicon futures.

On December 26, polysilicon futures were officially listed on the Guangzhou Futures Exchange, and the benchmark price of each contract (PS2506-PS2512) was 38,600 yuan/ton, and hit the daily limit at the opening of the market, at 44,000 yuan/ton, and then fell back quickly and fluctuated, most contracts narrowed to 7%~8%, and only PS2512 remained above 10%.

As of the close of trading at 15 o'clock on December 26, the trading volume of polysilicon futures was 331,300 contracts, the open interest was 39,700 contracts, and the turnover was 41.635 billion yuan.

In fact, 20 days after 33 PV companies signed the "Self-Discipline Convention", the polysilicon leader fired the "first shot" of the PV industry's anti-involution and production reduction action, and the polysilicon spot market has heard a "rising voice".

On December 25, the Silicon Branch of the China Nonferrous Metals Industry Association issued a document saying that the transaction price of polysilicon rose slightly in the week ended December 25. Among them, the transaction price range of N-type re-feeding materials was 38,000 yuan/ton~44,000 yuan/ton, and the average transaction price was 40,600 yuan/ton, up 0.74% month-on-month; The transaction price range of N-type granular silicon was 37,000 yuan/ton~38,500 yuan/ton, and the average transaction price was 38,000 yuan/ton, up 2.70% month-on-month.

Polysilicon prices are on a rollercoaster ride, and risk management tools are urgently needed

Polysilicon is known as the "industrial cornerstone" of the photovoltaic industry and is an important raw material for the solar photovoltaic industry and the semiconductor industry.

Driven by the "dual carbon goal", China's photovoltaic installed capacity has increased significantly. According to data from the National Energy Administration, China's new photovoltaic installed capacity will be 216.88GW in 2023, a year-on-year increase of 148%, while photovoltaic installed capacity will surpass hydropower for the first time to become the largest source of non-fossil energy power generation.

After more than two years of price declines of more than 62%, polysilicon prices have continued to rise, from 58,400 yuan/ton in May 2020 to the highest point of 306,000 yuan/ton in 2022, an increase of 424%. While the profitability of polysilicon manufacturers is gradually improving, domestic PV companies are moving upstream to control raw material costs, and polysilicon production capacity is ushering in an expansion cycle, of which polysilicon production capacity will increase by 124% year-on-year in 2022.

With the gradual release of polysilicon production capacity at the end of 2022, China's polysilicon production capacity in 2023 has reached 2.1 million tons, accounting for 93% of global production capacity, becoming the "pillar" of global polysilicon. However, while the polysilicon industry is developing rapidly, China is also facing many problems such as phased mismatch between supply and demand, disorderly market competition and violent price fluctuations.

Affected by various factors such as industrial policies, production cycles and technological progress, the polysilicon industry is highly cyclical, and prices are often on a "roller coaster". From the perspective of specific price fluctuations, in 2019~2023, the annualized volatility of China's polysilicon spot prices will be 6.40%, 33.40%, 35.70%, 26.00% and 55.80% respectively.

The price fluctuations are drastic, which brings greater cost control challenges to enterprises in the photovoltaic industry chain, and at the same time, many photovoltaic companies have also lost money due to "price wars".

According to Choice data, in the Shenwan polysilicon wafer sector, the revenue and net profit attributable to the parent company of seven A-share listed companies in the first three quarters of 2024 both fell sharply, and all employees entered a state of loss. Among them, Daqo Energy (688303. SH), TCL Zhonghuan (002129.SZ), Mubang Hi-Tech (603398. SH) revenue fell by more than 50% year-on-year. More and more companies in the downstream PV cell module sector have turned from profits to losses, and the number of loss-making companies has increased from 3 in 2023 to 13 in the third quarter of 2024.

In this context, polysilicon futures came into being. Some industry insiders said that the listing of polysilicon futures will form a synergistic effect with industrial silicon futures and options, further enrich the risk management tools of the photovoltaic industry, provide a new price reference for the international trade of polysilicon, and help transform the scale advantage of China's polysilicon industry into price influence.

On December 25, the relevant staff of Xinte Energy told Times Finance that this (listing of polysilicon futures) is a good thing for the industry. Wang Zhichao, a photovoltaic analyst at Shanghai Ganglian New Energy Division, said in an interview with Times Finance that the listing of polysilicon will help all links in the industrial chain manage the risk of price fluctuations, lock in production costs and profits in advance, and more importantly, it can continue to strengthen China's pricing influence in the polysilicon industry chain.

Futures companies have already made moves

Regarding the performance of polysilicon futures on the first day of listing, Xia Yingying, an analyst at Nanhua Futures Nonferrous Metals, believes that the overall momentum is relatively strong, mainly due to the relatively low benchmark price setting of the Guangzhou Futures Exchange.

"At present, the spot price of N-type dense material is about 40,500 yuan, and the average cost of the industry is 43,000 yuan, which is higher than the benchmark price. In addition, the head production capacity has gradually reduced production and raised prices, and the overall market is optimistic about the subsequent recovery of polysilicon prices. The main reason for the difference in the far and near months is that most of the recent months are in the wet period, and the end of the year is in the dry period in the southwest region, and the production cost is high, which plays a certain role in supporting the price. Xia Yingying mentioned.

Wang Zhichao said that the current polysilicon prices have reached the cash cost of most companies, and as the leading companies have begun to reduce production one after another, the market has strong expectations for a rebound, and the prices of polysilicon manufacturers have indeed increased in December, and the prices of downstream silicon wafers have also increased. However, due to the suppression of fundamental inventories and demand, polysilicon prices are likely to fluctuate around the cost line in the future.

GF Futures said that looking forward to 2025, under the framework of the industry self-discipline agreement, the production enthusiasm of polysilicon enterprises is still not high at current prices, and the subsequent price focus is expected to gradually move upward. In addition, the demand for futures warehouse receipts may absorb the high inventory of polysilicon, and is even expected to bring demand growth to drive up prices.

However, the new energy team of Zheshang Futures believes that from a fundamental analysis, the polysilicon capacity/demand ratio is about 2.05, the industry has high inventory and low start-up, and the short-term price elasticity comes from the upstream and downstream start-up rhythm, and the range is limited. On the whole, the supply and demand pattern is suppressed, and the valuation is relatively supported, and the annual market of polysilicon is expected to run at 36,000 yuan/ton to 47,000 yuan/ton. Considering that the medium- and long-term fundamentals are weak and difficult to change, the market outlook as a whole will continue to maintain the idea of shorting on the rise.

On December 26, Zheshang Futures successfully completed the first over-the-counter polysilicon business. Regarding the idea of polysilicon hedging, some photovoltaic companies have a wait-and-see attitude towards Times Finance, but futures companies have begun to take action.

The relevant person in charge of a futures South China branch told Times Finance that some preparations have been made for the new varieties of polysilicon futures, and relevant activities will be organized to cultivate polysilicon market customers after the year.

A futures practitioner in East China also said that his futures company is currently giving some photovoltaic companies roadshow hedging plans and research frameworks, and will participate in some knowledge popularization conferences to enhance business capabilities. "[In terms of hedging,] the willingness of the upstream is stronger than that of the downstream."

Focusing on polysilicon futures, GF Futures has also done a lot of work. Xu Yanwei, Premier of GF Futures, told Times Finance that first, it has carried out multiple simulated trading tests to ensure the stability and reliability of the polysilicon futures trading system; The second is to set up a new energy industry chain development team to coordinate and promote the cultivation and development of the polysilicon futures market; The third is to do a good job of synergy with GF Securities, guide qualified large enterprises to apply for delivery warehouses and delivery brands, and guide industrial chain enterprises to participate in the "Green to New" plan of GFFE; Fourth, timely release of research reports on polysilicon futures and options to provide reference for traders to participate in the futures market and industrial enterprises to carry out hedging; Fifth, it has produced various forms of educational propaganda works such as polysilicon graphics and short videos, which have been viewed more than 20 million times on many platforms.