2026 H1 Polysilicon Market Analysis and Outlook — Prices Hit New Lows; Follow-up Focus on Costs and Policies [SMM Analysis]

SMM July 4 News:

Overall supply-demand imbalance persists, and prices struggle to improve.

Looking back at H1 2026, the polysilicon market, plagued by prominent overcapacity and historical inventory, saw occasional rebounds driven by policy expectations, but the overall downward trend remained unchanged.

From a price perspective, the peak occurred in early to mid-January, driven by the CPIA industry meeting in December, "capacity integration companies," and self-discipline expectations, with prices rising steadily, supported by the reported full cost line of 60 yuan. Actual transactions exceeded 55 yuan/kg, with some quotes even surpassing 60 yuan/kg.

However, sluggish downstream demand persisted, and downstream sectors could not accept excessively high prices. More importantly, as the self-discipline process fell short of expectations, some actions were even "called off," and polysilicon prices began to decline.

Subsequently, although another meeting was held around February, the outcome was unsatisfactory, and coupled with Chinese New Year being an off-season, after a very brief rebound, the decline resumed.

After that, polysilicon prices entered a prolonged period of sustained drops. Even with policy support from export tax rebates in March-April and broad price increases across multiple downstream sectors, polysilicon prices showed no significant improvement. The reasons are as follows: 1. Historical polysilicon inventory was severely backlogged, with producer inventories maintained at 4–6 months throughout H1. 2. Polysilicon overcapacity is evident: the industry’s installed polysilicon capacity has exceeded 3 million mt. Even excluding capacity idled for a longer period, there remains around 2.5 million mt. Compared to the demand of just over 1 million mt in 2026, the oversupply pressure is indeed too great. 3. The market was very concerned about supply performance ahead of the rainy season in Q2, leading to extremely cautious procurement starting from March.

As a result, polysilicon prices in June fell below last year's low, with low prices for dense/recycled polysilicon dropping to 31 yuan/kg, and some mixed polysilicon prices even falling below the 30 yuan mark.

From a supply-demand perspective, polysilicon operating rates in H1 2026 were relatively restrained due to price and cost factors, especially as a certain top-tier player completely halted production from the beginning of the year, further limiting polysilicon production in H1. According to SMM data, China's polysilicon production in H1 2026 totaled 534,400 mt, down 6.8% YoY, and a sharp decline of 46.67% from 2024. However, due to the enormous historical inventory and severe overcapacity, effective destocking could not be achieved.

It is also evident from the supply-demand chart that although most of H1 was in a destocking phase, the actual destocking volume was minimal.

Enterprises are also spontaneously exiting the market, while top-tier concentration remains undiminished.

Looking at individual enterprises, the market is undergoing spontaneous elimination and exit. SMM data shows that in 2024, there were about 16 enterprises that maintained stable production (not in long-term shutdown); in 2025, this number dropped to 13; and as of now, only 11 enterprises remain relatively stable in operation.

Market competition pattern, top-tier concentration from 2025 to H1 2026 did not show a significant decline. In 2025, CR5 accounted for about 78%, and in 2026, even against the backdrop of major production cuts at top-tier players in H1 (partly influenced by the low-water season), CR5 still stood at 77%.

H2 2026 Outlook: Focus on Costs and Policies

Looking ahead to H2 2026, SMM believes that from the supply-demand or capacity side, it is difficult to see a significant spontaneous improvement. Key attention should be paid to policy expectations and cost conditions—costs determine the price floor, while policies determine the price trend.

SMM believes that from the current price perspective, polysilicon prices in H2 are unlikely to see another significant drop. From the base cost curve, at the current price of around 31-33 yuan, except for granular polysilicon and a few top-tier advanced bases, most bases are already unable to cover their cash cost. This is also evidenced by the recent increase in enterprises cutting production in Xinjiang, Inner Mongolia, and other regions as prices have declined, with polysilicon enterprises showing little willingness to cut prices significantly. SMM believes the cash cost line of top-tier bases may serve as the lower limit for polysilicon prices in H2.

However, another key factor to watch in H2 is policy. Since H2 2025, polysilicon prices have been strongly influenced by policy factors. Related industry meetings were held as early as April, and preliminary discussions on energy consumption standards also took place in early May. Currently, market participants widely speculate that subsequent policies may follow two directions: one is to phase out high-energy-consuming capacity through energy consumption standards, and the other is a restriction against “selling below cost.” However, as of now, there have been no clear policy signals. There have been multiple market “rumors” previously, but most were later proven to be “false.” In recent days, some bases have indicated that they have submitted some relevant information. Some market participants speculate that there is a high likelihood of significant policy moves going forward, but this remains to be observed. SMM believes that this will also be a key factor influencing polysilicon price trends in H2.

However, if no relevant policies are introduced, polysilicon prices in H2 will likely mostly consolidate near the bottom...