After industrial silicon and lithium carbonate, the third new energy metal variety of the Guangzhou Futures Exchange will be "new", and the polysilicon futures contract and polysilicon option contract will be listed and traded on December 26, 2024 and December 27, 2024, respectively.

China is the world's largest producer, consumer and importer of polysilicon, and the relationship between supply and demand in the polysilicon industry has changed rapidly in recent years, and the price fluctuates greatly. Wang Yanqing, a senior analyst at China Securities Construction Investment Futures, told the Shell Financial Reporter that considering that the current polysilicon market has reached the bottom, there is room for industry profits to be repaired in the future, and the futures price in the early stage of listing may be significantly higher than the spot price.

Some companies are still waiting. On December 18, a polysilicon company told Beike Finance that the company has a team specializing in polysilicon futures, but it is still mainly based on fundamentals.

Polysilicon prices are volatile, and futures prices are expected to be significantly higher than spot prices in the early stages of listing

China is the world's largest producer, consumer and importer of polysilicon. According to the data of the Silicon Branch of the China Nonferrous Metals Industry Association, the global polysilicon output will increase from 300,000 tons in 2014 to 1.597 million tons in 2023, with an average annual compound growth rate of 20.42%. In 2023, China will account for 92.08% of the global polysilicon supply, occupying an absolute dominant position.

While the polysilicon industry is developing rapidly, it is affected by various factors such as industrial policies, production cycles and technological progress, and the relationship between supply and demand changes rapidly, and the price fluctuates greatly. The data shows that the volatility of polysilicon prices has increased significantly in recent years. From 2021 to 2023, the annual amplitude of polysilicon prices will be as high as 226.63%, 63.49% and 280.17%.

However, the Shell financial reporter learned that at present, some companies are still holding a wait-and-see attitude towards participating in futures trading.

On December 18, a polysilicon company told Beike Finance that it has a team dedicated to polysilicon futures, but it is still focusing on fundamental operations and will keep an eye on it, but has no plans to participate in the market operation immediately.

"At present, the upstream and downstream polysilicon are mostly in a wait-and-see state to participate in the futures market, and due to the phased supply and demand pattern, the upstream is slightly more enthusiastic than the downstream, or the market is in the order of attracting upstream participation at a high price, and then attracting downstream participation at a low price." Wang Yanqing, a senior analyst at China Securities Construction Investment Futures, told Shell Finance that the leading polysilicon companies compete with the second and third tiers in the futures market, and the brand premium cannot be reflected, so it is necessary to pay attention to the registration of delivery brands in the future. In addition, at present, polysilicon is mainly supplied directly from upstream and downstream, and trade links are scarce. After the listing of futures, the rhythm of traders' entry remains to be seen, if the upstream and downstream acceptance of intermediate trade links is slower, or to a certain extent, it may affect market participation and activity.

Regarding the outlook for polysilicon futures prices, Wang Yanqing said that there is a consensus that the polysilicon market has bottomed out, and there is a general bullish sentiment in the capital market, and the difference lies in the recovery path of the future market. Considering that the current polysilicon market has reached the bottom, there is room for industry profits to be repaired in the future, and the futures price may be significantly higher than the spot price at the initial stage of listing. At the same time, he said that compared with the industrial silicon varieties that have been listed in the broad futures, because a large number of industrial silicon enterprises have participated in hedging, the capital participation of entities is more, and the ratio of industrial funds to speculative funds is large, the volatility of industrial silicon futures is gradually decreasing, and in the early stage of the listing of polysilicon futures, considering the caution of enterprise participation and the strong attention of speculative funds, it may show greater volatility than industrial silicon futures.

Reducing the utilization rate has been dormant for the winter, and polysilicon companies are waiting for an inflection point

According

to the third quarterly report of A-shares, polysilicon companies are still in the red. Among the leading polysilicon companies, Daqo Energy (688303. SH) lost 1.099 billion yuan in the first three quarters, and Tongwei Co., Ltd. (600438.SH), which has a full industrial chain from polysilicon, lost 3.973 billion yuan in the first three quarters.

At a time when supply and demand are not yet balanced, the operating rate of many enterprises has fallen to a low level.

"At present, the polysilicon industry is at the bottom, and it is objective that the sharp decline in polysilicon prices has led to losses for the whole industry." TBEA (600089. SH) said in response to investors' questions on December 16 that the company, as one of the major producers in the polysilicon industry, accumulated sufficient cash flow at the peak of the industry and had sufficient capital reserves to survive the winter. When the polysilicon industry was losing money, the company took the initiative to adopt the best economic calculation of the production reduction plan and low inventory strategy.

Huang Hanjie, director and general manager of TBEA, revealed at a previous performance briefing that TBEA's current polysilicon operating rate is about 25%, and the output guidance for the fourth quarter is 15,000 to 16,000 tons. The company explained that it is more economical to maintain the current operating rate under the current polysilicon price after economic calculations.

According to the company's 2023 annual report, the capacity utilization rate of its two major polysilicon projects with an annual capacity of 100,000 tons/year is 93.30% and 71.00% respectively, and the capacity utilization rate of another phase of 100,000 tons/year polysilicon with a new production capacity of 100,000 tons/year put into operation in August 2023 has also reached 64.80%.

Another polysilicon company, Daqo Energy, disclosed in its third quarterly report that it expects polysilicon output of 31,000 to 34,000 tons in the fourth quarter and 200,000 to 210,000 tons in 2024, a significant decrease from the company's 2023 annual report of 280,000 to 300,000 tons in 2024.

Some polysilicon companies told Shell Finance that it is difficult to judge the price trend next year, and "hope that there will be an inflection point".

Industrial Futures pointed out in a recent research report that although overseas markets have contributed to China's exports, a large number of upstream supply-side resources have been released, and the supply and demand structure of industrial silicon and polysilicon will be relaxed in 2025, and prices will remain under pressure. The PV demand space of major overseas countries in 2024 and 2025 is calculated, that is, the corresponding demand for polysilicon in China is 127 and 1.35 million tons. In 2024 and 2025, China's polysilicon output is estimated to be 1.84 million and 1.91 million tons, and there is still a significant oversupply.