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<Research>JPM: Expected Negative Turn in CN Solar Industry Anti-involution; Regulators Aid Mid-term Price Stability
Recommend 26 Positive 44 Negative 16 |
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The expected negative turn in China's solar industry's anti-involution efforts has occurred, with spot prices for polysilicon dropping from above RMB50/ kg in February to RMB48 in early March, JPMorgan's research report indicated. The broker attributed this to the unclear definition of "production cost" in the Price Law, leading some manufacturers to offload inventory at lower prices due to cash flow pressures. On the policy front, China's Two Sessions prioritized fair competition, and authorities may address overcapacity issues through capacity control, standard setting, and price enforcement. If price regulators use industry average costs as a benchmark, polysilicon prices may stabilize at RMB47-50/ kg in the mid-term, though further short-term declines in spot prices cannot be ruled out. In the broker's view, regardless of the policy path, industry consolidation will be promoted, with timing being the only difference. Within the polysilicon industry, the broker favored Daqo New Energy (DQ.US) and GCL TECH (03800.HK), with the former's stock potentially more resilient due to its robust net cash position of USD2.3 billion at the end of last year. AASTOCKS Financial News Website: www.aastocks.com |
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