China’s first-ever polysilicon futures were launched on Thursday, providing a new tool for hedging in a market grappling with significant price fluctuations. The debut, held on the Guangzhou Futures Exchange, saw prices for the solar manufacturing material soar to the upper limit of 44,000 yuan per ton in the most-active June contract, following pledges by producers to cut output. The market eventually settled 7.7% higher, at 41,570 yuan per ton. A total of 331,253 lots were traded, with over 90% of transactions focused on the June contract.
The exchange offers seven contracts with delivery dates starting in June, and requires a margin of 9% of the contract’s value. On the first day, price movements were permitted to fluctuate by up to 14%, with daily limits set at 7% for future sessions.
China, the world’s leading producer of polysilicon, has been contending with a severe surplus in the market, resulting in a near 90% drop in prices over the past two years. The oversupply, driven by overexpansion in production capacity, has severely impacted profitability across the solar supply chain.
In response, polysilicon manufacturers, including major players Tongwei Co. and Xinjiang Daqo New Energy Co., have announced unspecified production cuts.
The Guangzhou exchange has had prior success with trading other green materials, such as lithium for electric vehicle batteries, which launched in 2023. Polysilicon options contracts are set to be introduced on December 27, further expanding the exchange’s role in the green energy sector.
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