Chinese Polysilicon Prices Surge Amid Government Efforts to Combat Overcapacity

China's polysilicon prices rose by as much as 15% for the third week, surpassing last week's increase. The government's anti-involution campaign aimed at curbing overcapacity has stimulated market sentiment, but the price rise has little support from fundamentals and supply-demand dynamics have not improved substantially. The most expensive polysilicon product now costs 41,700 yuan per ton.

China's polysilicon prices have surged by as much as 15% for the third consecutive week, according to data from the China Silicon Industry Association. The most expensive polysilicon product now costs 41,700 yuan per ton, marking a significant increase from last week's prices [2].

The rally in polysilicon prices can be attributed to the Chinese government's anti-involution campaign, aimed at curbing overcapacity in the industrial sector. This initiative has stimulated market sentiment, but the price rise appears to be unsupported by fundamentals and supply-demand dynamics have not substantially improved [2].

The anti-involution campaign targets sectors plagued by price wars and redundant production, aiming to restore pricing power and improve margins. The solar sector, for instance, has seen a wave of consolidation as state-backed giants like Longi Green Energy and JinkoSolar gain market share through vertical integration and advanced R&D [1].

While the campaign has led to a surge in polysilicon prices, the long-term impact on the solar sector remains uncertain. Investors should monitor the government's production quotas and subsidy reforms for sector-specific catalysts. The playbook for investors is clear: back firms with scale, state support, or technological differentiation, and avoid those reliant on subsidies or low-cost competition [1].

References:

[1] https://www.ainvest.com/news/xi-anti-involution-campaign-sector-consolidation-path-profitability-2507/
[2] https://www.bloomberg.com/news/articles/2025-07-16/china-polysilicon-prices-soar-as-rally-extends-for-a-third-week