TONGWEI CO.,LTD(SH:600438) Da Gong Guo Ji·2025-03-16 06:20Investment Rating - The report indicates that the polysilicon industry is currently in an oversupply cycle, with prices continuously declining and significant pressure on corporate profitability. The industry is rated with caution, emphasizing the need to monitor future supply-demand mismatches and improvements [1][12]. Core Insights - The polysilicon industry has entered an oversupply cycle since 2024, leading to a continuous decline in prices and significant pressure on profitability. Some polysilicon manufacturers are responding by reducing production and conducting maintenance to alleviate market pressures. The acceleration of capacity clearance and inventory reduction is expected to support polysilicon prices in the short term. However, the return of prices to a reasonable range dominated by supply-demand fundamentals remains to be observed [1][12][16]. Policy Environment - Polysilicon is a key raw material for photovoltaic modules and is positioned at the upstream core of the industry chain. Recent national policies have shown positive support and increased regulation to guide and promote the healthy and sustainable development of the industry. The policies aim to improve the supply-demand structure and enhance capacity quality, ensuring high-quality development for the industry [2][3][5]. Industry Structure - The polysilicon industry has seen rapid capacity expansion, with effective capacity reaching 2.3 million tons per year by the end of 2023, a year-on-year increase of 97.2%. Despite this, the downstream demand growth has been relatively weak, leading to an oversupply situation. The top five polysilicon companies hold a market share exceeding 70%, indicating a high industry concentration [6][7][10]. Product Structure - The main product form of polysilicon is rod silicon, but granular silicon is rapidly expanding its market share due to cost reduction and efficiency improvements. The market is transitioning from P-type to N-type silicon, which offers higher photoelectric conversion efficiency. This shift is expected to dominate the polysilicon market in the future [11][10]. Profitability - Since 2023, polysilicon prices have been on a downward trend, significantly impacting the profitability of companies in the industry. However, with some manufacturers implementing production cuts and maintenance, inventory pressure is expected to ease, providing support for polysilicon prices in the short term. The industry is currently facing high inventory levels, with approximately 350,000 tons of polysilicon inventory by the second half of 2024 [12][14][16]. Future Outlook - The acceleration of capacity clearance and inventory reduction is expected to alleviate the oversupply situation in the short term. However, the return of polysilicon prices to a reasonable range dominated by supply-demand fundamentals remains uncertain, especially with potential new capacity releases and increased market supply in the future [16].