Polycrystalline silicon hits limit down! Short-term demand off-season and inventory hard to clear... Policy game returns to supply-demand fundamentals
The polysilicon futures market suffered a setback at the beginning of 2026.
On the 8th, the main polysilicon futures contract plunged 9.00% in a single day, closing at 56,024 yuan/ton, a sharp drop of 5,300 yuan compared to the previous trading day's settlement price, with an intraday low of 53,610 yuan/ton. The main 2605 contract fell sharply in tandem, dropping more than 7%, with an intraday low of 54,500 yuan/ton. The spot market was likewise under pressure. According to Antaike data, although nominal weekly prices of N-type recycled material rose, downward pressure became evident during the day. Some traders have started discount selling strategies, and market sentiment quickly cooled.
This decline is not just a short-term capital game, but also a concentrated release of the industry's pessimistic expectations for the 2026 supply-demand structure. According to data from the Guangzhou Futures Exchange and the Tonghuashun Financial Database, open interest in the main contract was reduced sharply by 4,212 lots that day, with significant signs of capital outflow. This sell-off occurred against a backdrop of sluggish downstream module production and high inventory levels.
Although the market faces violent short-term adjustments, institutional analysis suggests the downside is restricted by cost lines. Sun Weidong, chief nonferrous metals analyst at Orient Securities Futures, stated in a research report on December 25, 2025, that current price fluctuations are a tug-of-war between “dreams and reality.” Although a demand vacuum exists in the short term, the industry's average all-in cost is about 48,000 yuan/ton, and it’s expected that the 2026 price will fluctuate between 42,000 and 80,000 yuan/ton, with the 42,000-yuan level potentially serving as a key cost support.
Worsening Supply-Demand Imbalance
The direct catalyst for this market move was a revision in policy expectations. The “Beijing Guanghe Qiancheng Technology Co., Ltd,” established at the end of 2025, was previously regarded as the key player in the photovoltaic industry’s “anti-involution” 2.0 phase. The market had widely anticipated that the platform would facilitate debt-transfer purchases to liquidate around 1.7 million tons of capacity, raising forward prices to the 60,000–70,000 yuan/ton range.
However, market news suggests that the platform’s initial positioning is more oriented toward industry coordination and information exchange, and has not yet launched large-scale substantive capacity stockpiling operations.
Analysts at Orient Securities Futures point out that acquiring production capacity involves huge capital costs and debt management: buying 750,000 tons would require about 45 billion yuan, making a one-step solution nearly impossible in the short term. The market’s pricing logic quickly shifted from policy speculation back to supply-demand fundamentals.
Weak Demand Season and Installation Forecast Cuts
While supply-side reforms have stalled, demand-side signals are even more severe. The current period is traditionally the off-season in Q1, with limited orders for downstream module manufacturers and their willingness to purchase silicon material dropping to rock bottom.
The longer-term concern is shrinking demand throughout 2026. Taking into account sluggish growth in major global markets such as China, Europe, the United States, and Brazil, Orient Securities Futures forecasts that new global PV installations in 2026 may drop to 428 GWac, a 17% year-on-year fall. Of this, China’s new installations are expected to be just 190 GWac, a sharp 36% decrease year-on-year.
Although markets like India, the Middle East, and Africa continue to grow strongly, this is insufficient to offset the decline in mature markets. Abroad, Europe faces its first demand reduction in years due to falling electricity prices and the phase-out of subsidies. In the US, uncertainties in Trump administration energy policy cast a cloud over demand. Weak end-user demand directly undermines the industry’s capacity to accept upstream silicon material prices.
Inventory Accumulation and Cost Battles
The direct result of supply-demand imbalance is surging inventories. Data shows that by the end of 2025, polysilicon industry inventory had exceeded 350,000 tons.
With destocking proving difficult, cost lines become the final defensive line for investors. Orient Securities Futures calculations show that the average all-in cost for current polysilicon producers is about 48 yuan/kg (48,000 yuan/ton), with the highest industry all-in cost around 56 yuan/kg.
Institutions consider 42,000 yuan/ton the strong support point for this downward move. The current market contest is whether leading companies will maintain high prices through alliances or introduce external competition, causing prices to collapse to cash cost levels.
Market Outlook: March May Be a Key Inflection Point
Looking ahead to 2026, the polysilicon market will be caught between “dreams and reality.” January and February are traditionally the off-season, when the market is likely to see prices with little actual trading. Wafer companies may force silicon price reductions by cutting production and drawing down raw material inventory.
Orient Securities Futures believes that March after the Spring Festival will be a key observation window. At that time, end-user demand may pick up, and the industry supply chain will face two possible paths: one, silicon alliances remain solid and downstream are forced to accept high prices; two, external capacity such as the Oman project is released or alliances break down internally, leading to further price declines.
Orient Securities Futures expects that in 2026, the main polysilicon contract price will fluctuate widely between 42,000 and 80,000 yuan/ton. For investors, although market is dominated by short-term risk aversion, there is no need to be overly bearish when prices approach the 42,000 yuan cost line, but close attention must be paid to actual progress in capacity reduction.
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