Flash | 07 Jan 2026 03:59:11 ET │ 12 pages China Solar Power Solar Product Prices Largely Steady This Week amid Soft Demand; We Assume PRC Solar Installations to -24% YoY in 2026E CITI'S TAKE Weekly solar product prices have increased 1-2% wow for upstream polysilicon materials and downstream solar modules this week, likely supported by anti-involution measures, while prices declined 1% for solar cells. PRC annual module output was -1.2% yoy to 563.2GW in 2025, according to SMM, affected by the absence of y ...

29 December 2025 | 11:03AM CST Equity Research CHINA SOLAR: TRACKING PROFITABILITY INFLECTION Dec-25: Increasingly wait-and-see stance with a new round of price hike proposed Our China Solar Profitability Tracker follows monthly supply/demand and inventory dynamics by sub-sector, and the spot prices/input costs implied cash GP & EBITDA margin trends for companies under our coverage. Key highlights in Dec MTD: Goldman Sachs does and seeks to do business with companies covered in its research reports. As a re ...

Summary of China Solar Profitability Tracker - November 2025 Industry Overview - The report focuses on the solar industry in China, particularly the dynamics of upstream and downstream segments, including pricing trends and profitability metrics for various solar components [1][3][5]. Key Highlights Pricing and Profitability Trends - Upstream wafer and cell prices declined by an average of 5% in November compared to October, attributed to a 70% increase in inventory in the solar cell segment amid weaker downstream demand [3][5]. - The production across the solar value chain is expected to decline by an average of 6% month-over-month in November, with the poly segment experiencing a significant drop of 16% [3][5]. - Despite a lower production-to-demand ratio of 110% in November (down from 116% in October), producer-side inventory days are projected to increase to 38 days from 33 days [8][10]. Export and Demand Dynamics - Cell and module export volumes decreased by 1% and 24% month-over-month, respectively, primarily due to reduced restocking activities as the overseas peak demand season concludes [3][5]. - The shift in procurement demand from India to Southeast Asia has also impacted export volumes [3]. Market Valuation and Risks - The market is currently pricing in solar component prices at Rmb57/kg for poly, Rmb1.8/pc for wafers, Rmb0.66/w for cells, and Rmb13/sqm for glass, indicating a potential downside risk of 33% for the coverage [3][13]. - The ongoing anti-involution campaign and restrictions on below-cost pricing are expected to only mildly improve the pricing outlook for poly, with downstream players likely needing to reduce selling prices to maintain market share [4]. Profitability Metrics - November's spot price implied cash profitability deteriorated in upstream segments while improving in downstream segments [5][7]. - The average cash gross profit margin (GPM) for Tier 1 poly is reported at 34%, with a decrease of 1 percentage point month-over-month [7]. Additional Insights - The report suggests a preference for investments in film, high-efficiency modules, and granular poly, while advising against investments in glass, rod poly, and certain wafer and equipment manufacturers [4]. - The analysis indicates that normalized profitability in the mid-to-long run is expected to remain low unless there is a reduction in Tier 1 capacity [4]. This summary encapsulates the critical insights from the November 2025 China Solar Profitability Tracker, highlighting the current challenges and dynamics within the solar industry.

Summary of the Conference Call on China's Solar Industry Industry Overview - The conference call focuses on the **China solar industry**, particularly the **polysilicon sector** and its efforts to combat "involution" [1][2]. Key Points and Arguments 1. **Positive Signs in Polysilicon Industry**: - Recent announcements from JA Solar and comments from industry leaders indicate a collective effort to address market challenges and improve self-discipline within the sector [1]. - The Deputy Secretary of the China Photovoltaic Industry Association expressed confidence in the industry's ability to implement anti-involution measures successfully [1]. 2. **Expectations for Pricing and Capacity**: - The anti-involution initiative is expected to succeed, leading to meaningful exits of polysilicon capacity, which will improve the supply-demand balance and alleviate overcapacity issues [2]. - Enhanced self-discipline is anticipated to sustain higher utilization rates, drive price recovery, and improve profitability for polysilicon firms in the medium term [2]. 3. **Current Market Conditions**: - Polysilicon prices remained stable at **CNY 50-52/kg** as of the week ending November 12, while wafer prices dropped by **3.0-3.7%** due to reduced demand from downstream solar cells [3]. - Solar cell prices were weak at **CNY 0.28-0.30/W**, attributed to sluggish shipments and high inventory levels [3]. 4. **Production Forecasts**: - Monthly production of polysilicon is expected to drop by approximately **20,000 tonnes** month-on-month to around **120,000 tonnes** in November, driven by lower utilization rates in Southwestern China [4]. - Solar wafer production is projected to contract by **5%** month-on-month to about **57GW**, while solar cell production is expected to decrease by **2%** month-on-month to **57GW** [4]. 5. **Price Trends**: - The price trends for various components of the solar supply chain indicate stability in polysilicon and module prices, while wafer and cell prices are experiencing downward pressure [6][12]. Additional Important Information - The industry is showing a heightened sensitivity to market chatter, which could disrupt market stability, indicating a cautious approach among producers [1]. - The overall sentiment is cautiously optimistic, with expectations of a recovery in pricing and profitability in the medium term, despite short-term challenges such as high inventories and seasonal demand weakness [2][3]. This summary encapsulates the key insights from the conference call regarding the current state and future outlook of the solar industry in China, particularly focusing on polysilicon and its market dynamics.

Summary of China Solar Profitability Tracker Conference Call Industry Overview - The report focuses on the solar industry in China, specifically tracking profitability trends and supply/demand dynamics within the solar value chain [1][5]. Key Highlights - **Module Price Trends**: Early signs of module price increases were noted, with China Huadian's 20GW solar project bidding starting at an average of Rmb0.71/w, which is 6% higher than the current spot module pricing of Rmb0.67/w. This price hike followed a joint meeting by six ministries on August 19 [5]. - **Supply/Demand Outlook**: The monthly supply/demand ratio is expected to worsen, estimated to be between 1.4X-2.1X in August, down from 1.3X-1.7X in July. This deterioration is attributed to slow supply cut adjustments, with increased inventory pressures in the Poly and Module segments [5][12]. - **Production Increases**: Production across the value chain is expected to increase by 5%-20% month-over-month in August, with specific increases of +19% for Poly, +5% for Wafer and Cell, and +12% for Module [11]. - **Inventory Dynamics**: End-August inventory is projected to decline significantly in the Cell and Glass segments due to higher module production demand, while Poly and Module inventories are expected to rise [12]. Financial Metrics - **Profitability Trends**: Cash gross profit margins (GPM) and EBITDA margins have shown improvement in upstream segments but have deteriorated in downstream segments. For example, the cash GPM for Poly is at 29%, while for Modules, it is at -3% [6][9]. - **Spot Price Changes**: As of August 21, 2025, spot prices for most value chain products remained stable, except for a 6% increase in Glass prices due to rapid inventory depletion [17][21]. Sector View - The report suggests that the solar sector is at a cyclical bottom, with a potential inflection point expected around the second half of 2026. However, normalized profitability is likely to remain low due to a slowdown in demand growth in China [5]. - **Investment Preferences**: The report indicates a preference for investments in Cell & Module and Film segments, while showing a bearish outlook on Glass, Poly, Wafer, and Equipment segments [5]. Additional Insights - **Challenges in Implementation**: The anticipated price hikes and profitability improvements are contingent on effective implementation of policies, which currently face challenges due to a lack of fiscal support and changes in local government incentives [5]. - **Diverse Inventory Days**: The average inventory days across the value chain are expected to remain at around 40 days in August, reflecting a diverse inventory situation relative to demand [12][15]. This summary encapsulates the key points from the conference call regarding the current state and outlook of the solar industry in China, highlighting both opportunities and risks for investors.

Investment Rating - The report maintains a cautious outlook on the solar industry, expecting significant capacity cuts and a decline in capital expenditures, leading to a weaker pricing outlook and flattened profitability curve [4]. Core Insights - The profitability for solar value chain segments is likely to fall below pre-rush installation levels in May, with cash profitability expected to deteriorate to average levels seen in Q1 2025 [2][4]. - A rapid decline in upstream pricing is observed due to weaker demand and aggressive low-pricing strategies by Tier 2-3 players, impacting the overall market dynamics [2][19]. - Proactive price stabilization efforts by leading players are crucial to monitor in June, as inventory pressures are expected to continue increasing [2][14]. Summary by Sections Pricing Trends - As of May 15, 2025, spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average declines of -2%/-14%/-3%/-3%/-6%/-3% MTD, and -8%/-17%/-7%/-2%/+8%/+1% compared to pre-rush installation levels [2][19][20]. - Glass prices appear more resilient compared to other segments, primarily due to lower inventory days [20]. Profitability Metrics - Spot price implied cash gross profit margins (GPM) for various segments showed significant declines, with Tier 1 cash GPM for Poly/Wafer/Cell/Module/Glass/Film averaging flat/-13pp/+1pp/-4pp/-3pp/flat MTD [10]. - Monthly average cash profitability in May is likely to deteriorate to levels seen in Q1 2025, indicating a challenging environment for the industry [2][7]. Production and Inventory Dynamics - Production volumes are expected to decline by an average of 4% month-over-month in May, with specific declines in Poly/Wafer/Cell/Module [12]. - Inventory days are likely to rebound to an average of 30 days in May from 25 days in April, indicating a higher production-to-demand ratio [13][15]. Future Outlook - The report anticipates deeper solar capital expenditure declines of -55% year-over-year in 2025, with lower capacity utilization rates expected [4]. - Continued supply increases for Glass are projected, which may lead to a rapid inventory restock and a potential price cut to Rmb12/sqm in Q3 2025 [3][14].