Sinolink: Upstream in the photovoltaic industry sees price increases, silicon wafer prices rise significantly.

Sinolink released a research report that as of January 15th, the prices of N-type recrystallized silicon materials/N-type granular silicon were 41,700/39,000 yuan/ton, up by 2.7%/2.6% from the end of December. Polysilicon enterprises have voluntarily reduced production, leading to a significant decrease in industry supply. Leading and frontline enterprises are maintaining low production levels in January, resulting in a stable industry supply. Prices have increased as a result, with companies gradually implementing these price hikes in early January. Additionally, companies are controlling shipments to consume downstream inventory, leading to a slow but continuous increase in transaction prices. Furthermore, it is worth mentioning that due to the Chinese New Year holiday, it is expected that silicon wafer production in January will decrease by 3% to 45GW, tightening supply-demand relationship. Leading companies are leading silicon wafer manufacturers in collectively raising prices. Sinolink's key points are as follows: Key Policies/News Tracking: 1) On December 26, 2024, polysilicon futures and options officially started trading on the exchange, with the reference price of 38,600 yuan/ton. On the first day of trading, the futures contract saw a 14% increase, pushing silicon material prices to rebound. 2) On December 30, 2024, China's China Water Conservancy and Hydropower Materials Group, a subsidiary of China Datang Corporation, held a seminar on the quality and technology of photovoltaic modules. They introduced the "20 rules for photovoltaic quality control" from the procurement side, aiming to maintain the industry's healthy development and improve the quality of photovoltaic equipment procurement in China Datang. Industrial Chain: Upstream pricing increases, stabilizing component prices 1) Silicon materials: Prices have slightly increased, with N-type recrystallized silicon materials/N-type granular silicon priced at 41,700/39,000 yuan/ton as of January 15th, up by 2.7%/2.6% from the end of December. Polysilicon enterprises have voluntarily reduced production, leading to lower industry supply. Companies have raised prices, with these hikes gradually taking effect in early January. Companies are also controlling shipments to consume downstream inventory, leading to a slow increase in transaction prices. 2) Silicon wafers: Prices have increased substantially, with industry inventory quickly being absorbed. Due to the Chinese New Year holiday, it is expected that silicon wafer production in January will decrease by 3% to 45GW, tightening supply-demand relationship. Leading companies are leading silicon wafer manufacturers in collectively raising prices. 3) Battery cells: Prices have slightly increased, with battery cell manufacturers gradually reducing production. It is expected that production in January will decrease by 18% to around 45GW. Overall industry inventory levels are healthy, with upstream silicon wafers' price increases driving an increase in battery cell prices. However, future price trends in the battery cell segment will still be influenced by component prices. 4) Components: Prices have fallen, with weak end-demand. After completing project deliveries at the end of the year, companies are considering self-regulatory measures, reducing operating rates and extending the Chinese New Year holiday. It is expected that component production in January will decrease by 15% to around 40GW. Previous low-priced products affecting the spot market have led to a continuous decline in average prices, while centralized prices remain stable. Most manufacturers are following industry association guidance on pricing. 5) Auxiliary materials: The price of 2.00mm photovoltaic coated glass has slightly increased. As the Chinese New Year holiday approaches, component companies have lower production levels. Demand is weaker than before, while supply stability is reflected in lower inventory levels. The inventory days have decreased by 0.37 days to approximately 33.46 days compared to the end of December. The price of photovoltaic EVA is stable, with component manufacturers reducing production in January. Orders for film factories have decreased, petrochemical factories have reduced photovoltaic material production, and current inventory levels are low. The price of photovoltaic EVA material remains stable at 10,550-10,800 yuan/ton. Demand: Domestic installations exceeded expectations in December 2024, and export scale continues to grow compared to 2023 1) Domestic installations: In December, there were 70.87GW of new installations, up by 34% year-on-year and 183% month-on-month. From January to December, there were a total of 277.17GW installed, up by 28% year-on-year. 2) Exports: In December 2024, 22.6GW of PV modules were exported, up by 24% year-on-year and 10% month-on-month. European exports have rebounded, and emerging markets have maintained high activity. Among them, component exports were 17.07GW, up by 9.8% year-on-year and 9.9% month-on-month. Brazil and Pakistan have maintained high activity, with monthly exports of 2.25/1.22GW, and exports to India increased by 127% month-on-month to 1.24GW. In December, exports to ten European countries were 4.61GW, up by 13.6% year-on-year and 46.1% month-on-month. Battery cell exports in December reached 5.6GW, up by 104.0% year-on-year and 10.8% month-on-month. India and Indonesia have had high export activities, with monthly exports of 2.9/1.1GW. From January to December, a total of 59.1GW of battery cells were exported, up by 65.1% year-on-year. Collective Procurement Data Tracking: In January 2025, there were 9.5GW awarded and 0.9GW contracted. The median price of N-type modules in January increased by 0.023 yuan/W compared to December 2024. According to incomplete statistics, in 2024, large SOE bids for components amounted to 271/199GW, a decrease of 5%/1% year-on-year. As of January 20, in January 2025, there were 9.5/0.9GW awarded/contracted, a decrease of 85% and 93% year-on-year. In terms of prices, the bids for N-type modules in January ranged from 0.67-0.71 yuan/W, and among the projects with announced contracts, the standard price for N-type products was 0.69 yuan/W, with a median price increase of 0.023 yuan/W. Investment Recommendations: Sinolink suggests that in the current environment where multiple factors are influencing the industry chain, it is important to pay attention to the trend of bottoming/recovery of prices, decreasing inventory, and leading companies stabilizing. It is important to adopt a trading strategy of "buying when there is no one asking" and recommends focusing on opportunities in the "glass, battery cells, new technologies, overseas/American markets" that have clear alpha, followed by leading companies in the main chain. Risk Warning: Significant fluctuations in traditional energy prices (downward), irrational expansion of industry capacity, deterioration of international trade environment, unmet expectations in energy storage and flexible resources cost reduction. (Note: This translation may contain some technical terms specific to the industry which may require additional context for a full understanding.)