With the release of the performance forecast of polysilicon companies, the losses of leading companies last year have also revealed the true face of Lushan.

A number of companies said that the imbalance between supply and demand in the domestic polysilicon market became more and more serious last year, with a sharp increase in supply and a relative lag in demand growth, resulting in product prices falling all the way down and falling below the industry's cash cost line.

However, after the cold winter comes spring, and there are positive signs during this time. On the evening of January 21, GCL Technology (HK03800, stock price HK$1.17, market value HK$33.32 billion) released an announcement on the latest progress of the granular silicon business, and the company's granular silicon cash cost in the fourth quarter of 2024 broke through the limit and was only 28.17 yuan/kg. According to the current transaction price of polysilicon, the cost of granular silicon of GCL Technology is already lower than the market transaction price. An official from GCL Technology said that it is expected to end the era of polysilicon losses soon and "should be profitable".

Polysilicon companies were under pressure last year

Entering the annual report performance forecast disclosure season, a number of PV upstream polysilicon companies have disclosed last year's performance forecast.

Tongwei (SH600438, share price 19.98 yuan, market value 89.95 billion yuan) is expected to lose 7 billion to 7.5 billion yuan last year. The market price of each link of the photovoltaic industry chain has dropped sharply, and even continued to be lower than the impact of the industry's cash cost, superimposed on the impact of the impairment and scrapping of long-term assets of about 1 billion yuan throughout the year, which led to a large loss of the company last year.

Daqo Energy (SH688303, share price 20.43 yuan, market capitalization 43.83 billion yuan) expects a net loss attributable to owners of the parent company of 2.6 billion yuan to 3.1 billion yuan in 2024. The reason for the loss given by Daqo Energy is that the imbalance between supply and demand in the domestic polysilicon market is becoming more and more serious, with a sharp increase in supply and a relatively lagging demand growth, resulting in product prices falling all the way down and falling below the industry's cash cost line.

TBEA (SH600089, share price 11.93 yuan, market value 60.28 billion yuan) is expected to achieve a net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses of 3.6 billion yuan ~ 4.1 billion yuan in 2024, a decrease of 6.3 billion yuan ~ 6.8 billion yuan compared with the same period last year, a year-on-year decrease of 60.58% ~ 65.38%. The reason given by TBEA is that due to the imbalance between supply and demand in the photovoltaic industry chain, the market price of polysilicon has fallen below the cost of polysilicon manufacturers since April 2024 and continues to run at a low level, and the company's polysilicon business will suffer a large loss in 2024.

In fact, last year's performance loss was also within the expectations of industry insiders. At last year's major photovoltaic conferences, Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, described it more than once as the "most serious challenge" - the scale of losses caused by industry fluctuations far exceeded the previous three industry fluctuations.

Under the pressure of the industry's predicament, Tongwei Co., Ltd. and Daqo Energy also carried out phased production reduction and production control actions last year. In addition, the industry has gradually reached an "anti-involution" consensus. Since May 2024, the PV industry has intensively issued a number of policy documents, involving improving technical standards, cracking down on vicious competition below cost, and standardizing local investment promotion policies, with the aim of reasonably guiding the construction and release of PV upstream production capacity and preventing duplicate construction of inefficient capacity.

Some positive signs have emerged

Now, some positive signs are emerging. On the evening of January 21, GCL Technology released an announcement on the latest progress of the granular silicon business, and the company's cash cost of granular silicon in the fourth quarter of 2024 broke through the limit and was only 28.17 yuan/kg.

According to the announcement, in the fourth quarter of 2024, GCL Technology's granular silicon output will be 70,900 tons, sales volume will be 74,600 tons, and the cash cost including R&D costs will be 28.17 yuan/kg, which is 15% lower than 33.18 yuan/kg in the third quarter. At the same time, the company will achieve an output of 269,200 tons of granular silicon and a shipment of 281,900 tons in 2024, and the inventory will continue to decrease.

The Silicon Industry Branch issued a document on January 15 saying that the transaction price of polysilicon rose slightly this week. The transaction price range of N-type re-feeding material was 39,000~45,000 yuan/ton, and the average transaction price was 41,700 yuan/ton, up 0.48% month-on-month, and the transaction price range of N-type granular silicon was 38,000~41,000 yuan/ton, and the average transaction price was 39,000 yuan/ton, up 0.52% month-on-month. The transaction price range of P-type polysilicon was 32,000~36,000 yuan/ton, and the average transaction price was 34,000 yuan/ton, up 0.89% month-on-month.

According to the current transaction price of polysilicon, the cost of granular silicon of GCL Technology is already lower than the market transaction price. An official from GCL Technology said that it is expected to end the era of polysilicon losses soon and "should be profitable".

The Silicon Industry Branch also expressed an optimistic judgment on the changes in polysilicon prices this week. The Silicon Industry Sub-Council believes that the main reason for the price increase is the dual expectation of declining polysilicon output and the conscious reduction of shipments by enterprises. At present, polysilicon companies have raised their external quotations, and the actual transaction prices have slowly risen. At this stage, polysilicon companies have little inventory pressure, but the sales pressure has been greatly alleviated after the load reduction of production, and it is hoped that the downstream raw material inventory can be gradually reduced by reducing shipments and restoring the price of polysilicon to a reasonable level.