Zhongjin: The photovoltaic industry's anti-insular trend has entered a crucial observation point, with the sector still having significant room for further performance.

CICC released a research report stating that after the photovoltaic industry experienced an installation rush in the first half of the year and price support in the third quarter, operational pressure has been somewhat relieved. However, debt pressure remains high, the supply-demand relationship has not significantly improved, and the necessity of anti-internal competition is still present. With the joint efforts of various ministries, associations, and enterprises, the anti-internal competition initiatives in some areas are gradually becoming clear. Although there are still significant challenges overall, the continuous promotion of anti-internal competition and the resilience of the sector are still promising. September is a crucial time for the implementation of anti-internal competition policies. The photovoltaic sector has performed well since July, but there has been no significant outperformance relative to the market YTD, indicating that there is still considerable room for improvement. Operating cash flow has improved, but debt pressure remains high. In the second quarter of 2025, the photovoltaic industry saw improved operating cash flow due to the impact of Document No. 136, which led to an installation rush. It is expected that under the price increase in the third quarter of 2025, the operating cash flow in the industry will still be good, to some extent delaying the natural industry consolidation. In addition, the industry saw significant cash outflows for financing in the second quarter of 2025, and debt pressure remains high, highlighting the continuing necessity of anti-internal competition. The path to anti-internal competition is clear, with supporting measures being pushed forward. The Ministry of Industry and Information Technology and five other ministries have clearly stated that they will crack down on selling below cost and promote the orderly withdrawal of outdated capacity in a market-oriented and legal manner. For example, according to the Silicon Material Sub-Council, the silicon material industry needs to reduce capacity to 2.3 million tons through capacity consolidation. Additionally, supporting measures such as controlling capacity additions, revising price laws, energy-saving inspections, and changing government assessment methods will effectively support the success of anti-internal competition. Future focus will be on the implementation of the silicon material plan and anti-internal competition in battery components, with components priced at 0.85 yuan/W needed for the entire industry chain to break even. The differentiation between polysilicon futures and stock/spot markets in the early stage reflects the contradiction between strong expectations and weak realities, with the period-to-spot price difference narrowing. It is important to monitor the implementation of specific plans. Additionally, how prices will be transmitted downward and how the internal competition in the battery component segment will be addressed are equally important. The calculation shows that component prices need to be 0.85 yuan/W for the entire industry chain to break even. Selling above the cost price is one of the key points, and further price increases domestically and internationally will depend on more policy support.