CITIC Futures: Polycrystalline silicon remains in the stage of a tug-of-war between sentiment recovery and fundamental constraints

Last week, the “anti-involution” expectation was reinforced again, and market sentiment was somewhat boosted. However, due to production resumption expectations and the high premium pressure in the market, polysilicon prices first rose and then fell. On the supply side, most silicon material companies maintained production cuts in April, but as market prices rebounded and the water-rich season approached, there was an expectation of marginal supply recovery. According to news from the Silicon Industry Branch, some leading factories slightly delayed maintenance in April, and the domestic polysilicon output forecast for April was slightly revised upward. On the demand side, the pace of domestic photovoltaic installations was relatively slow in the first quarter, and after the export tax rebate window closed, overseas demand experienced a phased decline, leading to a month-on-month decrease in the production of wafers, cells, and modules in April. Currently, demand remains relatively weak. Considering the low baseline of downstream production, demand may see marginal improvement in May driven by domestic order recovery. From the inventory perspective, industry inventory has rapidly depleted in the past two weeks. On one hand, after prices stopped falling earlier, downstream stocking willingness increased; on the other hand, the steady low spot prices caused a significant premium in the market, with some inventories shifting to the market, and warehouse receipts rapidly rebounding. Polysilicon remains in a stage of emotional recovery and fundamental constraints battling each other. The “anti-involution” expectation and cost-side factors provide some support. However, after prices rise, upstream supply release and hedging pressure are strengthened, and demand remains relatively weak. We believe polysilicon prices will fluctuate within a wide range. (CITIC Futures)