Polysilicon futures prices have fallen for six consecutive sessions. What is the core contradiction?

On March 19, the polysilicon futures continued to decline, with the main contract PS2605 closing down 5.77% at 38,550 yuan/ton. The daily K-line has closed lower for six consecutive trading days.

CITIC Futures analyst Zheng Feifan believes that amid rising risk aversion, most risk assets have pulled back. At the same time, expectations for market clearance of polysilicon capacity have strengthened, causing spot prices to continue falling, which has significantly dragged down futures prices.

Guoxin Futures analyst Li Xiangying thinks that the rapid decline in polysilicon prices is due to a resonance of macro and fundamental factors. From a fundamental perspective, high and continuously accumulating industry inventories have exerted significant pressure on both futures and spot prices.

Zheng Feifan states that current polysilicon inventory pressure remains considerable. Upstream silicon material companies have alleviated supply pressure through production cuts and control measures, but the industry is still in a phase of inventory accumulation in the short term. It will take time to clear inventories and adjust supply-side. As of the week ending March 13, polysilicon inventories stood at 372,900 tons, still at a high level.

Regarding spot transactions, data from the China Nonferrous Metals Industry Association Silicon Branch (referred to as the Silicon Branch) shows that market trading sentiment has weakened this week, with only 2-3 companies securing new orders. Transaction volumes and activity levels have declined compared to previous weeks. Explaining the reason for the sluggish market, the Silicon Branch said that some large orders in March were signed at the end of February and early March, so there are fewer new contracts this week. Additionally, downstream companies are pessimistic about the market outlook and are cautious in procurement.

“Against this backdrop, some upstream companies, to ease cash flow pressures, have been forced to accept lower quotes to close deals, further lowering the spot transaction price center, which in turn transmits downward pressure to the futures market,” Li Xiangying explained.

According to the Silicon Branch data, this week’s N-type re-investment material transaction prices ranged from 42,000 to 45,000 yuan/ton, with an average of 43,200 yuan/ton, down 4.42% week-on-week.

On the macro level, recent intensification of Middle East geopolitical conflicts has driven crude oil prices sharply higher, causing volatility in global capital markets. Assets outside of energy and chemicals have experienced sell-offs, affecting polysilicon as well. “Recently, crude oil prices have continued to rise, pushing up raw material costs, but terminal demand remains relatively weak, and market risk appetite has declined,” Li Xiangying said. As a result, there was obvious selling pressure on new energy metals like polysilicon after today’s opening.

Looking ahead, the Silicon Branch believes that in the short term, weak demand and high inventories remain the core contradictions dominating the market. On April 1, the VAT export rebate for photovoltaic and other products will be fully canceled, which may slow overall export growth and weaken polysilicon demand. Meanwhile, industry inventories continue to accumulate, and the inventory depletion turning point has not yet appeared.

Zheng Feifan thinks that without clear policy signals in the short term, market expectations for “counteracting internal competition” remain cautious. Polysilicon prices will likely stay under pressure in the near term, continuing to fluctuate around cost support levels. Attention should also be paid to geopolitical tensions affecting energy-intensive products. In the medium term, ongoing policy developments and gradual supply contraction could improve the supply-demand structure marginally, allowing polysilicon prices to gradually recover and stabilize. In the medium to long term, prices may remain volatile within a broad range.

“In the short term, polysilicon futures are under dual pressure from weak fundamentals and external asset sell-offs, facing downward risks. There are no clear signals of a bottom yet,” Li Xiangying warned investors to wait for market stabilization and for clear signs of improvement in supply and demand or external markets before cautiously entering.