Sinolink: Domestic demand recovery, industry self-discipline initiated to solidify the bottom of photovoltaic prices in multiple links.

Sinolink released a research report stating that the bottom of the prosperity in various links of the photovoltaic industry is solidified, and the fastest turnaround in profitability of the main industrial chain is expected to come in the 25Q2. It is anticipated that most targets will show a trend of "fluctuating upward" in the future. At the current point in time, it is suggested to focus on the three main lines of "valuation gap, new technology growth, and remaining as the king" for the next 25 years. In the short term, actively embrace (glass, battery slices, new technology, overseas large storage), and closely track potential improvement signals (product prices, demand exceeding expectations, Q4 performance landing). Sinolink's main points are as follows: Key policy tracking: 1) The Shanghai Futures Exchange announced that polysilicon futures and options will officially begin trading on December 26th, which is expected to help digest polysilicon inventory and repair prices, assisting companies in smoothing out operational fluctuations. 2) From December 4-6, 2024, the annual conference of the photovoltaic industry and a "special symposium" were held in Yibin, with 33 industry leading companies attending and reaching basic consensus, solidifying the bottom of the industry's prosperity. Industrial chain: Prices are solidified after multi-link exploration post self-discipline meeting 1) Polysilicon: Prices have slightly decreased, with N-type recycled material/N-type granular silicon prices at 40,300/37,000 yuan/ton respectively as of December 18, down 1.0% compared to the end of November/maintaining stability. Polysilicon companies continue to reduce production, with an expected 16% decrease to 98,000 tons in December compared to November, but the adjustment speed is slower than downstream, maintaining high inventory and loose prices. Considering the fermentation of industry self-discipline behavior, pre-holiday demand stimulus, and the upcoming launch of polysilicon futures, market supply and demand and spot prices are expected to rebound, with a strong sentiment for price increases within the industry. 2) Silicon wafers: The price of 183N has slightly increased, with the supply and demand relationship at the silicon wafer end being repaired, overall inventory decreasing. The supply of 183N is tight, and transaction prices are rising, with an expected 4% increase in output in December to 45GW. 3) Battery slices: Prices have slightly decreased, with downstream component manufacturers shutting down for the Chinese New Year holiday in January next year, resulting in a corresponding decrease in M10 battery slice demand, with an expected 7% decrease in output in December to 51GW. The bargaining power of the battery segment is relatively weak, and future prices are still constrained by components. 4) Components: Prices are holding steady, with component manufacturers exploring price increases after the self-discipline meeting, but final demand is weak, and some enterprise component inventory remains high. Manufacturers are cautious in production scheduling, with an expected 13% decrease in component output to around 48GW in December. 5) Auxiliary materials: Glass prices are relatively stable, with component companies making necessary purchases but with average transactions. Some supply side facilities are undergoing maintenance or repairs, leading to a downward trend in production, with inventory days down 11.7% to 34.12 days, but still at a high level. Photovoltaic EVA prices are rising, with market inventory low, spot shortages, and prices supported, leading to transaction prices rising to 10,600-11,100 yuan/ton. Demand: Domestic installations rebounded in November, with export volume maintaining year-on-year growth 1) Domestic installations: New domestic installations in November were 25.00GW, up 17% year-on-year and 22% month-on-month; Accumulated installations from January to November were 206.3GW, up 26% year-on-year. 2) Exports: In November, battery component exports were 20.55GW, up 12% year-on-year, but down 14% month-on-month. Component exports to Europe were 3.2GW in November, down 9% year-on-year and 50% month-on-month. Battery slice exports were 5.0GW in November, up 50.8% year-on-year and 13.0% month-on-month. From January to November, battery slice exports totaled 53.55GW, up 61.9% year-on-year. Bid tracking data: 58GW opened for bidding in December, with 9GW approved, and it is worth expecting the peak season for domestic installations in Q4 In December, the central price of N-type bidding remained steady at 0.63-0.72 yuan/W. As of December 20, large-scale component bidding/opening/approvals by state-owned enterprises for 2024 totaled 269/300/198GW, down 5%/+38%/stable year-on-year; The November bidding increased by 287% to 59GW, with 25/58/9GW bid/opening/approval in December. Regarding prices, the average bidding price for N-type projects in December ranged from 0.63-0.82 yuan/W, with N-type conventional products being bid at 0.63-0.72 yuan/W in approved projects. Risk warning Significant fluctuations in traditional energy prices (downward), irrational expansion of industry capacity, deterioration of international trade environment, energy storage, and flexibility resources falling short of cost reduction expectations.