Summary of Key Points
In 2025 and 2026, there were two instances of price limit-ups for polysilicon futures. However, the reaction of stocks in the photovoltaic sector was vastly different: in 2025, the entire industry chain saw a general increase in prices, while in 2026, only a few leading upstream companies (such as Tongwei) performed well, with most companies experiencing limited gains. The key difference lies in the underlying logic of the price increases. In 2025, policy initiatives sparked a positive cycle where "price increases → inventory replenishment → further price increases" drove overall profit recovery. In 2026, although policies were stricter, downstream demand was weak, inventory levels were high, and cash flows were tight, preventing the price increases from having a broader impact and benefiting only a few low-cost leading companies.
Detailed Analysis
1. Dramatic Differences in Stock Performance During the Two Price Limit-Up Events
- In 2025, when polysilicon prices hit their limit-up, the photovoltaic sector experienced a collective surge: the photovoltaic equipment index rose by 5.68% in one day, with nearly ten stocks reaching price limits, and Tongwei's stock value increased by more than 30% within a month. Even the photovoltaic ETF saw a gain of over 5%. In contrast, during the 2026 price limit-up, only companies like Tongwei and Foliate experienced price limits, while Tianhe Solar and Jinko Energy only rose by around 5%, and the photovoltaic ETF increased by 1.87%. Simply put, in 2025, everyone benefited from the price increases, whereas in 2026, only a few companies profited, with most others struggling.
2. 2025: The Entire Industry Chain Profited Together; 2026: Only Leading Companies Succeeded
- The logic behind the price increases in 2025 was one of mutual benefit for the entire chain. Policies aimed to curb unregulated competition, leading to initial price hikes for silicon materials. Fearing a shortage of low-cost supplies, downstream companies quickly stocked up, reducing inventory levels and driving up spot prices. This in turn led to price increases in silicon wafers, batteries, and modules, as the higher costs from upstream were passed through to the entire industry, resulting in widespread gains for stocks.
- In 2026, the situation was reversed: policies were stricter (with direct regulatory actions against price violations), but downstream demand remained weak, inventory levels were high, and cash flows were tight. As a result, price increases did not spread beyond the leading companies with lower costs.
3. Weak Downstream Demand as the Core Barrier to Price Increases in 2026
Downstream companies faced two major challenges:
- Excessive Inventory: The total inventory across the industry chain exceeded 510,000 tons, sufficient for several months of production. Silicon wafer manufacturers had existing stock and were not eager to purchase more.
- Lack of Funds: Silicon wafer and module manufacturers were generally losing money, with some even selling products at prices below cost, leaving them with tight cash flows. The increase in silicon material prices meant they needed to spend more on inventory replenishment but lacked the funds to do so. This was a stark contrast to 2025, when downstream companies had the funds and were willing to buy more.
4. Stronger Policies Were Ineffective Due to Weak Demand and High Inventory
Although policies in 2026 were more stringent (with the State Administration for Market Regulation taking direct action against price violations), they could only address issues related to competitive behavior, not market supply and demand:
- Weak Demand: Final installation demand was lower than in 2025, making it difficult for modules to be sold at higher prices.
- Inventory Pressure: The existing inventory of 510,000 tons would not disappear, and silicon material manufacturers might increase production during periods of low electricity costs (which are more favorable for production). While policies could eliminate inefficient capacity, they could not solve the problems of poor sales and insufficient funding.
5. Looking Ahead: The Market Depends on Real Transaction Activity
To determine whether the market in 2026 will follow the same pattern as in 2025, three key indicators need to be monitored:
- Increase in Spot Transactions: Whether downstream buyers are actually purchasing at higher prices after the price increases.
- Reduction in Inventory: Whether inventory levels of silicon materials and wafers are decreasing, indicating that downstream companies are starting to replenish their stockpiles.
- Improvement in Downstream Cash Flow: Whether module manufacturers can sell their products and receive payment on time.
If these indicators improve, it suggests the initiation of a positive price cycle that could spread across the entire sector. Otherwise, if only silicon material companies call for price increases without downstream buyout, the market will remain limited to the leading companies, resulting in a localized trend rather than a broader industry boom.
In Conclusion
Although the two price limit-up events appeared similar, the underlying reasons behind them were fundamentally different. In 2025, the entire photovoltaic sector benefited, but in 2026, only the leading companies succeeded. For a widespread increase in the sector, downstream companies must have both the funds and willingness to purchase. As of now, the conditions for a broader market improvement are not yet met.