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[News] China Introduces First Polysilicon Futures to Address Major Price Volatility
According to a report from TechNews, citing Bloomberg, China officially launches its first polysilicon futures on December 26 as a tool to hedge against volatile price fluctuations in the polysilicon market. In addition, a polysilicon options contract will be introduced on December 27.
The report highlights that the Guangzhou Futures Exchange is offering seven contracts for delivery starting in June 2025. These contracts require a margin of 9% of the contract value. Prices can fluctuate by up to 7% from the previous day’s settlement price, with a broader swing limit of 14% on the first day of trading.
As the world’s largest producer of polysilicon—a key material used in solar panels—China has dominated the market. However, the industry is now facing overcapacity due to rapid production growth in the country. The report notes that, over the past two years, polysilicon prices have plunged by nearly 90%. Similar to other parts of the solar supply chain, this oversupply has led to declining profitability across the sector.
To address this steep price drop, major polysilicon manufacturers have already begun cutting production. The report points out that two leading companies, Tongwei Co. and Xinjiang Daqo New Energy, announced production cuts this week, although neither disclosed the specific scale or reasons for the reductions.
China continues to actively promote clean energy development, as highlighted in the report. The Guangzhou Futures Exchange has already seen success in trading other green materials, such as lithium for electric vehicle batteries, which launched last year. The introduction of polysilicon futures is expected to further strengthen market mechanisms within the renewable energy supply chain, as the report from TechNews indicates.
Notably, the report from TechNews mentions that the Office of the U.S. Trade Representative (USTR) announced plans to impose Section 301 tariffs on solar wafers, polysilicon, and certain tungsten products imported from China. The import tax rate on solar wafers and polysilicon will double from the current 25% to 50%. Additionally, the tax rate for specific tungsten products—used in semiconductor manufacturing—will increase from 0% to 25%. These new tariffs are set to take effect on January 1 of 2025.
According to the report, the U.S. Trade Representative’s office believes that the tariff hikes will weaken China’s policies and strengthen the U.S. clean energy economy. In response, China’s Ministry of Commerce criticized the move, stating that the World Trade Organization (WTO) has already ruled the U.S. Section 301 tariffs on China violate WTO regulations. China’s Ministry of Commerce urged the U.S. to correct its actions and remove the tariffs, warning that China will take necessary measures to defend its interests.
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(Photo credit: Guangzhou Futures Exchange)
