Silicon Industry Branch: The supply and demand expectations of the polycrystalline silicon market in the second quarter are expected to remain balanced, and the futures reservoir may help alleviate the industry's inventory pressure.

On April 18, the data released by the Silicon Branch of the China Nonferrous Metals Industry Association showed that the domestic production of polysilicon in the first quarter was approximately 294,500 tons, a significant decrease of 44.7% compared to the same period last year. In the first quarter, the domestic polysilicon industry continued to show a "three lows and one high" operating state, with market prices and supply and demand remaining low, but inventory remaining high. The market supply and demand outlook for the second quarter is expected to remain balanced, with futures reservoirs expected to alleviate industry inventory pressure. In addition, historical data shows that the amount of polysilicon directly imported from mainland China to the United States accounts for a very low proportion of its total imports, and in the past, the United States has already included some of China's major polysilicon companies in its "Entity List." Therefore, the additional types of tariffs imposed on polysilicon from China have not had a significant impact on the industry, only increasing the import costs for the United States. First quarter market situation Supply and demand: In the first quarter, various silicon material enterprises responded to self-discipline appeals, reducing production and capacity, with the average operating rate of domestic polysilicon enterprises dropping to below 40%, the lowest level in history. The domestic production of polysilicon in the first quarter was approximately 294,500 tons, a significant decrease of 44.7% compared to the same period last year. The expected imports in the first quarter were 8,500 tons, accounting for less than 3%; at the same time, the production of monocrystalline silicon in the first quarter was 144.23 GW, a decrease of 26.1% compared to the same period last year, with a demand for silicon materials of 298,700 tons, and an expected export of polysilicon of 6,000 tons, an increase of 65.8% compared to the previous year, resulting in basic market supply and demand balance. In the end-use solar photovoltaic field, in the first two months, domestic installed capacity was 39.47 GW, growing by 7.49% compared to the same period last year, while component exports were 36.6 GW, a decrease of 1.0% from the previous year, with the exports of components to certain countries like Portugal and Pakistan showing significant growth year-on-year; cumulative battery cell exports were 11.1 GW, a decrease of 8.4% year-on-year; Inventory: as of the end of March, the total inventory of the domestic polysilicon industry was still around 391,800 tons, and the industry was in a slight destocking phase this quarter. Price aspect: In the first quarter, the price of domestic N-type Polycrystalline Chunk was stable at around 41,600 yuan/ton, a decrease of 41.49% compared to the same period last year. The prices have been falling continuously, basically dropping below the cash costs of all producing companies, and the industry as a whole has been in negative cash flow for more than three quarters. Table: First quarter 2025 Polysilicon Market Operating Situation Second quarter market outlook Supply and demand: Looking ahead to the second quarter of 2025, the supply and demand in the domestic polysilicon market is expected to remain balanced. Although the supply may be affected by the addition of some new production capacity and the impact of the high water period at the end of the second quarter, considering the current low prices, most companies will focus on balancing by replacing production capacity, and there is unlikely to be a sudden surge in production levels. It is expected that the domestic supply in the second quarter will be between 300,000-320,000 tons, with an increase of no more than 10%. At the same time, the silicon wafer production is expected to reach 150 GW in the second quarter, with a demand for silicon materials of 315,000 tons. Although the inventory remains high, the effect of futures reservoirs is gradually showing, and it will also alleviate industry inventory pressure. Price aspect: In the second quarter, the price of domestic polysilicon is expected to remain stable, although there are still uncertainties, mostly influenced by the market's pessimistic expectations after the "430" and "531" installments. At the same time, there are still some panic expectations in the industry regarding low-price dumping by enterprises and concentrated production resumptions during the high-water period. After verification with relevant companies, the speculation of "low-price dumping" is baseless, and companies have not taken any substantive actions. Impact of the China-US trade war on the market In response to US tariff barriers, Chinese polysilicon photovoltaic companies will actively explore third-country paths, accelerate overseas layout, and consolidate competitiveness through technological iterations. If 20% equivalent tariffs in Europe are used as a benchmark, countries with a 10% tariff and the ability to manufacture photovoltaic products are mainly concentrated in the Middle East and North Africa regions, and it is expected that the North Africa and Middle East regions will replace Southeast Asia as the new export region to the United States in the future.