All-Round Increase on the First Trading Day: Polysilicon Futures Start Strong with a Turnover of 41.635 Billion Yuan. What Are the Future Investment Opportunities?

All Contracts Closed Higher on the First Trading Day, Marking a Strong Debut for Polysilicon Futures.

According to the official website of the Guangzhou Futures Exchange (GFEX), as of the close of the daytime session on December 26, all seven listed polysilicon futures contracts turned positive. The most-traded PS2506 contract closed at 41,570 yuan/mt, up 7.69%. Several other contracts also posted gains exceeding 7% on the day, with the far-month PS2512 contract surging 11.4%.

Trading data for the day showed that as of the 3:00 PM close, the trading volume of polysilicon futures reached 331,300 lots, with an open interest of 39,700 lots and a turnover of 41.635 billion yuan.

Notably, on December 27, polysilicon options contracts will also be launched for trading. According to the GFEX website, the trading hours for polysilicon options will align with those of polysilicon futures contracts.

Industry insiders believe that the performance of polysilicon futures on the first trading day aligns with market expectations and is expected to attract more diversified investors in the future. The across-the-board gains may be related to the pricing of the benchmark listing prices. However, under the current fundamental pattern of oversupply, what are the prospects for polysilicon futures?

First Trading Day: All Contracts Rose, with Trading Volume Exceeding 330,000 Lots.

On the first trading day, polysilicon futures opened higher and fluctuated. The most-traded contract hit the upper limit shortly after the opening, but the limit was later lifted. By the close, all contracts had risen, with gains exceeding 7%. The far-month PS2512 contract recorded the largest increase of 11.4%.

"During the day, polysilicon futures prices opened high but fluctuated downward, reflecting intense tug-of-war between longs and shorts, with the bears slightly dominating," analyzed Wang Yanqing, a futures analyst at China Securities. He attributed the significant divergence between the two sides to the current weak supply and demand fundamentals of polysilicon.

On one hand, production cuts by leading producers have boosted market sentiment. On the other hand, the downstream wafer segment is still actively destocking, which weighs on demand.

Xia Yingying, a nonferrous analyst at Nanhua Futures, noted that GFEX set a relatively low benchmark listing price for polysilicon futures. Currently, spot prices for N-type dense material are around 40,500 yuan, while the industry’s average cost is about 43,000 yuan, both higher than the benchmark price. The differing trends between near-month and far-month contracts may be due to the near-month contracts coinciding with the rainy season, while the far-month contracts correspond to the year-end dry season in south-west China, where higher production costs provide some support for far-month prices.

Wang Yanqing added that from the perspective of profit recovery, there is a bullish outlook for long-term polysilicon futures. As a result, the PS2506 contract shows a premium against spot prices, and the PS2512 contract also shows a premium against the PS2506 contract. As the futures market stabilizes, the price spread structure may shift to Contango (where far-month contract prices exceed spot prices).

He explained that in the spot market, the current spot price of the benchmark delivery brand N-type material for polysilicon futures is about 39,000 yuan/mt, a level at which most companies are incurring cash cost losses.

Regarding the significant premium of the PS2512 contract over the PS2511 contract, Wang Yanqing mentioned that this could be due to the concentrated cancellation of warehouse warrants for polysilicon futures in November 2025. The pressure from the influx of these warrants into the spot market may weigh on the PS2511 contract price, leading to a widening price spread between PS2511 and PS2512.

From the trading perspective, Xia Yingying observed that overall sentiment was high on the first trading day, with participants primarily engaging in exploratory operations, reflecting rational market sentiment.

"From the open interest perspective, the PS2506 contract is the most-traded contract. However, it is worth noting that the far-month PS2511 and PS2512 contracts also have relatively high open interest, which may indicate market recognition of the PS2511-PS2512 spread strategy," Wang Yanqing said. He believes that as warehouse warrant registration gradually begins, trading volume in the futures market will steadily increase.

New Listing: A Cornerstone for the New Energy Industry Chain.

Polysilicon is not only a key raw material for manufacturing solar cells and integrated circuit silicon substrates but also a cornerstone for the development of the new energy and information industries. Polysilicon is derived from silicon metal, which has a purity of about 99%. Through physical or chemical purification methods, the silicon purity is increased to over 99.9999%, resulting in high-purity silicon materials.

Today, the launch of polysilicon futures marks the addition of another new energy metal product to GFEX, following silicon metal and lithium carbonate. At the listing event for polysilicon futures, Duan Debing, a member of the Party Committee, Vice President, and Secretary General of the China Nonferrous Metals Industry Association, stated that the listing of polysilicon futures and options is an important initiative by GFEX to deepen and expand financial services for the real economy and the new energy industry.

He believes that the listing of polysilicon futures and options will better enable upstream and downstream enterprises in the industry chain to manage risks at a high level, improve operations, control risks, and enhance quality and efficiency. It will also promote the use of market-based mechanisms to improve resource allocation efficiency, foster a favorable environment for industrial development, and support high-quality growth in the sector. Furthermore, it will enhance the price discovery function, standardize the pricing system for crystalline silicon PV products, and further elevate China’s international influence and pricing power in the crystalline silicon PV industry, thereby strengthening the resilience and security of the industry chain, supply chain, and value chain.

Gao Weibing, Party Secretary and Chairman of GFEX, stated in his speech that GFEX will further implement the spirit of the State Council General Office’s forwarded opinions on strengthening supervision, preventing risks, and promoting high-quality development of the futures market. Based on the fundamental purpose of serving the real economy and the unique positioning of supporting green development, GFEX will continue to enhance market cultivation efforts, enrich its regulatory toolbox, and ensure the safe and stable operation of the market. GFEX will work with all stakeholders to contribute to the steady and long-term development of the PV and other new energy industries, supporting the green and low-carbon transition.

Outlook: Can a Unilateral Trend Be Achieved?

After the across-the-board gains on the first trading day, the market is now focused on how long the upward trend can last.

From the perspective of supply and demand fundamentals, Wang Yanqing noted that on the supply side, polysilicon losses have not significantly improved, while inventory levels remain high. Coupled with some production capacity in south-west China entering the dry season, leading producers have significantly reduced production schedules. The cash flow pressure from weak fundamentals may also affect the commissioning progress of future capacity.

On the demand side, the wafer segment is still in the process of destocking, with current inventory levels close to those in Q1 this year. However, low prices have led to weaker profitability in the wafer segment compared to other main material segments. It is expected that wafer production will remain at low levels to facilitate active destocking, thereby weighing on polysilicon demand.

"Currently, the PS2506 futures price shows a premium against spot prices, but the premium is not significant, which may indicate that the market expects limited room for a rebound in polysilicon prices," he analyzed. Considering the implementation of production cuts by leading producers and the policy space for supply-side adjustments, he suggested that polysilicon futures may see a slight rebound in the short term. However, given the slowdown in demand growth, the rebound is expected to be limited.

Xia Yingying believes that in the short term, the supply-demand pattern and inventory changes in the spot market will directly influence price trends. Based on the current spread between futures and spot prices and the Contango structure, the market holds a cautiously optimistic view of a slight price rebound in the future.

Looking ahead, Wang Yanqing mentioned that since the slowdown in polysilicon demand growth is relatively certain, attention should be paid to changes on the supply side. These include whether capacity exits the market smoothly amid industry losses, the implementation of industry self-regulation mechanisms, and the intensity and effectiveness of future supply-side reforms.