Tongwei and Daqo Shares Rally on Polysilicon Regulatory Rumours, Prices Stay Depressed

Why It Matters

The episode underscores how speculative rumors can temporarily lift equities, but the deeper issue of oversupply and falling polysilicon prices continues to pressure margins for PV manufacturers and investors alike.

Key Takeaways

• Tongwei shares jumped 7.9% after false production‑cut rumor
• Daqo Energy rose nearly 8% despite denying meeting participation
• Polysilicon futures hit US$5,100/ton, hitting daily limit
• Average n‑type polysilicon price fell 1.4% month‑on‑month
• March output rose 9.7% while April expected to drop 8%

Pulse Analysis

The Chinese polysilicon market experienced a classic case of rumor‑driven volatility on April 13, when unverified minutes of a supposed Chengdu meeting suggested coordinated production cuts. Traders reacted swiftly, pushing the benchmark futures to RMB 34,770 per ton—about US$5,097—triggering daily‑limit moves and lifting the shares of major producers Tongwei and Daqo Energy by roughly 8%. Both firms quickly refuted participation, illustrating how market sentiment can be swayed by speculative narratives even in a tightly regulated sector.

Beneath the headline‑making rally, the fundamentals remain challenging. Data from the China Non‑ferrous Metals Industry Association shows the average price for n‑type polysilicon slipping to RMB 36,000 per ton, a 1.37% month‑on‑month decline, while granular silicon fell 4.11% to RMB 35,000 per ton. Production figures reveal a paradox: March output surged 9.7% to 92,600 tons, yet April is forecast to contract by about 8% to roughly 85,000 tons. This mismatch between rising supply and weak downstream demand fuels ongoing inventory pressure and keeps prices near cost levels for leading manufacturers.

Looking ahead, industry analysts expect a gradual correction driven by deliberate capacity reductions and inventory destocking. The China PV Industry Association predicts that lower utilisation rates among top producers will help rebalance the market in Q2, but the pace will be tempered by sluggish demand recovery. Investors should monitor policy signals and actual output adjustments rather than headline rumors, as the sector’s profitability hinges on aligning production with the modest growth in solar installations worldwide.