On July 17, polysilicon futures prices opened high and then surged significantly, with multiple contracts rising over 7%, hitting a record high since their listing. This round of increases was mainly driven by multiple favorable factors: first, the expected spot sales price is higher than the benchmark full cost; second, spot quotes continue to rise; third, downstream product prices have been adjusted upwards to above the full cost; fourth, the open interest of the polysilicon 2508 contract remains high, and as the delivery month approaches, bears closing their positions further drive up prices.
Spot Sales Prices Continue to Climb
The center of spot sales prices continues to shift upwards, with quotes rising, creating greater upside room for polysilicon futures. Currently, the support for futures prices is gradually rising, the spot market is active with transactions, and prices are increasing, further supporting the rise in futures prices.
According to data from the Silicon Branch of the China Nonferrous Metals Industry Association, the volume of spot polysilicon transactions has increased, with about six enterprises signing new orders, and prices smoothly passing through to the downstream. This week, the spot transaction price range was 40,000-49,000 yuan/mt, with order prices mostly concentrated at the two ends of the range. The main reason for the price differentiation is that some enterprises have cost advantages such as captive power plants, allowing them to trade at relatively lower prices. Some large factories, due to insufficient operating rates at individual bases and higher comprehensive costs, still manage to secure high-price transactions with downstream producers thanks to their quality assurance and stable supply capabilities. According to SMM statistics, the average quoted price for recharging polysilicon continues to rise to 46.75 yuan/kg, providing strong support for the upward movement of futures prices.
Downstream Product Prices Increase Synchronously, Price Transmission is Smooth
Previously, the market held a wait-and-see attitude after the significant increase in polysilicon prices, with rapid quote adjustments in the short term not yet forming effective transactions. The market focused on the price transmission mechanism and the realization of supply-demand balance.
Currently, downstream product prices have been adjusted upwards accordingly, with a relatively smooth price transmission path, indicating that this round of price increases is supported by downstream demand, with a more solid foundation. According to data from the Silicon Branch, this week, wafer prices have rebounded significantly. Specifically, the average transaction price for N-type G10L monocrystalline silicon wafers (182×183.75mm/130μm) was 1.05 yuan/piece, up 22.09%; the average transaction price for N-type G12R monocrystalline silicon wafers (182×210mm/130μm) was 1.15 yuan/piece, up 15.00%; the average transaction price for N-type G12 monocrystalline silicon wafers (210×210mm/130μm) was 1.35 yuan/piece, up 13.45%. The significant increase in wafer prices is driven, on the one hand, by the continuous rise in polysilicon prices; on the other hand, it is due to the production cuts by wafer enterprises, leading to a decline in both production and inventory, thereby supporting the price rebound.
Polysilicon 2508 Contract Open Interest Remains High, Approaching Delivery Drives Up Prices
The open interest of the polysilicon 2508 contract approached 80,000 lots at noon on July 17, far exceeding the current number of warrants and significantly higher than the total production in the past two months. As the delivery month approaches, bears face two choices: first, to purchase warrants for delivery to settle the contract; second, to directly close their positions and exit the market. At the close on July 17, the open interest of the 2508 contract remained at about 70,000 lots. If bears choose to close their positions subsequently, it will further drive up prices; if they choose to purchase warrants, it may push up spot prices. Overall, the current market environment is more favorable for bulls.
Outlook for the Future
Supported by the anti-"rat race" competition policies, polysilicon futures prices have followed spot quotes to rise significantly in the near term, hitting a record high since their listing. Bullish sentiment remains high in the short term, and with a limited number of warrants, prices still have upside room. However, if the price increase significantly deviates from the cost range, it may stimulate capacity release, thereby affecting the supply-demand pattern. Close attention should be paid to subsequent policy and industrial regulation trends.
The continuous increase in polysilicon prices has a positive impact on the repair of industry profits, but the extent to which enterprises benefit will depend on their cost control capabilities, product quality, and sales capabilities. High-quality products are more competitive in the market at the same price, while high-cost capacity may gradually be eliminated. In the short term, profits for high-quality polysilicon enterprises are expected to rebound rapidly; in the medium and long term, attention should be paid to the reverse impact of capacity release on prices after profit repair. As prices continue to rise, the divergence between bulls and bears intensifies, and market participants should strengthen their risk awareness and manage risks properly.
Please note that this news is sourced from https://www.cnmn.com.cn/ShowNews1.aspx?id=463547 and translated by SMM.
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