Minmetals Securities: Demand in Major Global Installation Regions Is Lackluster; Anti-Involution in the PV Industry Drives the Advancement of High-Efficiency BC Technology

Minmetals Securities released a research report stating that amid lackluster demand, the natural supply-side clearing of the PV industry and the push from anti-involution policies have led to premiums for high-quality capacity emerging both domestically and internationally. At the same time, natural capacity clearing events among leading players deserve attention, as they drive improvement in the industry's supply-demand environment, leading to valuation and performance recovery for related companies. For the industry, conditions are not yet in place for large-scale deployment of BC capacity; the coexistence of multiple crystalline silicon routes should be the mid-term industry scenario, and strengthening tandem product deployment may be the breakthrough solution. The main views of Minmetals Securities are as follows: Demand in major global installation regions is lackluster In the Chinese market, after new energy fully enters the market, electricity price pressure persists. In most provinces, PV settlement prices are below the coal benchmark price and the levelized cost of electricity range, resulting in poor project economics. In 2026H1, PV installation bidding and grid connection both fell short of expectations, with demand showing a phased decline. In the U.S. market, demand has declined under the impact of OBBBA, especially in the residential market, with industry growth slowing. In Europe, major countries such as Germany, France, and the Netherlands are gradually phasing out new energy subsidies, and factors such as grid congestion and negative electricity prices have become important constraints on PV installations, with future installation growth also expected to slow. Growth in major PV installation regions is unsatisfactory, and industry demand will remain relatively flat in the near to medium term. Active and passive forces driving industry supply clearing The industry's main supply chain has been loss-making for 11 consecutive quarters. Polysilicon inventories remain high, supply chain prices continue to face pressure, and companies are bleeding severely amid low utilization rates. Tail-end capacity has already begun natural clearing, though industry concentration has remained basically stable. It was not until 2026 that a small number of mergers and acquisitions among leading enterprises emerged, marking the initial appearance of natural clearing. Anti-involution efforts continue to advance, with strong standards guiding high-quality industry development through "quality, energy efficiency, and efficiency" approaches: 1) Quality: price monitoring plus quality spot checks form baseline constraints to prevent extreme low-price competition, with mandatory requirements for module safety and nameplate labeling; 2) Energy: raising efficiency thresholds so that low-efficiency capacity cannot produce or sell, while guiding high-efficiency products in market promotion; 3) Efficiency: establishing energy consumption standards so that high-energy-consumption outdated production lines face rising compliance costs or forced shutdowns. BC technology receives considerable support, as modules can easily meet Grade 1 standards. BC penetration rate rising, technology diversifying BC modules' domestic winning bid share continues to rise, commanding a premium over TOPCon modules both domestically and internationally. More and more companies are joining the BC array. At the same time, technologies are converging and then diverging againconverging from chip lithography and laser solutions, with laser solutions becoming mainstream, followed by the emergence of post-printing lithography. The progress in cost, yield, and efficiency of the latter during 26Q427Q1 is worth watching. BC patent competition has also entered public view. Against the backdrop of currently weak domestic demand and global trade conflicts driving the globalization of PV manufacturing capacity, patent requirements will become increasingly important. Risk warnings: 1. Anti-involution policy implementation falls short of expectations, and industry involution persists; 2. Industry demand falls short of expectations, and competitive intensity continues to increase; 3. Trade frictions intensify, and blocked domestic exports lead to exacerbated overcapacity; 4. Foreign capacity expansion exceeds expectations, intensifying competition for domestic capacity.