As we step into 2025, the photovoltaic (PV) industry is witnessing an upward trend in pricesThis development has been highlighted by data from the China Nonferrous Metals Industry Association’s silicon branch, which indicates that both silicon materials and wafers are experiencing price increases due to a significant gap between supply and demand.

Historically, the period leading up to the Lunar New Year has been traditionally regarded as an off-peak season for the PV industryThe stabilization of prices for PV products can be attributed to a supply-side self-regulation initiative launched in mid-2024 across the entire sectorThis strategy involved reducing output to protect prices and accelerate the clearance of existing capacityAn essential point of interest for market analysts during this earnings season is whether this supply reduction will help PV companies rebound in performance by the fourth quarter of 2024.

Amidst the contention over whether the solar market has hit its lowest point in 2024, industry insiders interviewed by reporters have emphasized that a search for positive signals within the sector has become the dominant theme

Advertisements

Factors such as inventory turning points, price fluctuations, and competitive advantages among leading firms are garnering significant attention.

Stabilization of silicon prices has paved the way for a positive opening in silicon wafer pricingAs the upstream component of the PV supply chain, silicon prices have a ripple effect across the entire sectorThe silicon branch of the association anticipates that production levels will continue to be restrained into January 2025, with estimates suggesting that polysilicon output may fall below 100,000 tons, marking a decline of approximately 5% from December 2024. This anticipated downturn is likely to have widespread ramifications across the entire supply chain, necessitating close monitoring of supply and demand dynamics, so market players can flexibly adjust their strategies.

As January approaches and the Lunar New Year holiday nears, production and sales activities are expected to be impacted due to employee leave and logistics constraints, leading to decreased operational rates and subsequently lower polysilicon outputs.

Looking back at 2024, the PV industry experienced a year rife with declining prices across various segments

Advertisements

Prices for silicon materials, wafers, solar cells, and modules plummeted by an average of 60% to 80% from peaks in 2023. The total supply of silicon in China for 2024 reached 1.8428 million tons, representing a growth of 25.32% compared to the previous year, but with a utilization rate of only 64.25%. This discrepancy highlights the dual challenge of excess capacity and market absorption following rapid expansion, placing immense pressure on the profitability and cash flow of related solar companies.

The decline in silicon prices had a particularly pronounced impact on wafer prices, with market leaders such as LONGi Green Energy and TCL Zhonghuan reporting losses exceeding 6 billion CNY in the first three quarters of 2024. By the end of the year, the wafer market was settling into a more stable phaseAs 2025 commenced, wafer prices saw a positive surge, with most manufacturers implementing price increases ranging from 3% to 12% based on January pricing

Advertisements

Specifically, N-type wafers demonstrated notably higher price elasticity compared to P-type wafers, whose demand has dwindled significantly within domestic markets, leading to dependence on overseas orders for sales.

Analysts from the silicon branch attribute the uptick in wafer prices primarily to supply mismatchesDownstream cell manufacturers have accelerated their purchasing pace, resulting in shorter negotiation cycles for wafer companiesThe forecast for January indicates an increase in wafer supplies to over 46 GWHowever, as battery and module production typically slows in January, with manufacturers expecting early shutdowns, output for batteries and modules could drop to around 40 GW, leading to a replenishment phase for silicon wafers following the depletion of inventory in late December 2024.

Amidst these shifting price dynamics, InfoLink emphasizes that 2025 presents numerous uncertainties

• Bank-Resold Funds Ignite New Price War
• Rising Bankruptcy Rates in the U.S.
• Zeekr Targets SUV Market Again with New Model
• Record Online Sales During Holiday Shopping Season
• Acceleration of Machine Tool Industry Chain Evolution

The self-regulatory measures adopted by the industry will require time to evaluate their effectivenessPrice levels are currently testing their lowest points, and any future strategic shifts by companies will be closely linked to price trends, necessitating active engagement with supply chain dynamics, especially regarding pre-holiday inventory buildup in January.

As the new year unfolds, the PV sector has struggled relative to the broader marketData from Wind indicates that the sector’s 95 stocks averaged a decline of about 3.6% in 2025. The photovoltaic index similarly declined by 3.52%, roughly parallel to other major indices like the CSI 300. Following a year in which policy expectations and market enthusiasm sharply cooled, individual stocks within the PV sector experienced an average pullback of 33%. This relatively low valuation, combined with the ongoing trend of clearing out excess capacity, has led investors to consider whether the PV sector is becoming a “buy” opportunity during its current state of neglect.

Industry professionals assert that 2025 will likely be a year of consolidation within the PV sector, with short-term mismatches in supply and demand unlikely to resolve quickly

However, compared to the significant price plummets observed in 2024, there is a general belief that the likelihood of sharp price declines in 2025 is diminished, with an increasing chance of establishing a price floorAccording to a private equity fund manager in Eastern China, the current financial reporting season will be criticalThe forecasts and subsequent annual reports from PV companies will help investors gauge whether the sector has fully absorbed all negative impacts, allowing for the identification of positive signals.

At present, only Xinyi Solar has publicly disclosed its earnings, projecting a staggering 70% to 80% drop in net profits for 2024 due to imbalances in market supply and demand for solar glass productsThe significantly reduced prices of solar glass in the second half of 2024 compared to the previous year's levels have adversely affected revenues and gross margins while leading to impairments from production facility downtimes and price-driven inventory write-downs.

Data from Zhuochuang Information indicates that industry inventory has been declining for two consecutive months as of late 2024. By December 2024, inventory levels reached 1.6742 million tons, down 17.3% from late October

Given the nature of solar glass production, which is challenging to halt once initiated, smaller manufacturers face substantial financial liquidity demands to restart operationsConsequently, leading firms are taking proactive measures to adjust supply and demand by intentionally idling some production capacities, while the exit of weaker competitors is expected to further solidify the competitive advantages of these top playersGuojin Securities suggests that the earnings forecast of these glass manufacturers may signify the onset of a catalyst for a market resurgence.

In addition to the main supply chain, price movements in components such as inverters and glass also serve as vital indicatorsTypically, the period surrounding the Lunar New Year marks a seasonal lull in module production, a trend that often prompts post-holiday boilerplate restocking among downstream manufacturersFollowing the holiday, a combination of low supply and continued self-regulation by the industry may set the stage for critical turning points in inventory levels in the first half of 2025, making this an essential area of focus for observers of the solar market.