Rebound or reversal? How to view this wave of photovoltaic rise?

The A-share photovoltaic sector experienced unusual movements yesterday, significantly outperforming the broader market. Behind this trend is the market's optimistic expectation of rising photovoltaic module prices and potential supply-side reforms.

JP Morgan stated that the demand for photovoltaic modules rebounded in March, driving up prices along the industry chain, while market expectations for supply-side reforms were reignited. Referring to market performance during the last round of policy expectation warming, the photovoltaic sector may still have room for growth.

Demand Rebounds, Module Prices Look Up

In a report dated February 26, JP Morgan indicated that the demand for photovoltaic modules has significantly rebounded recently. According to data from Shanghai Metal Market (SMM), the expected output of photovoltaic modules in March 2025 exceeds 50GW, a substantial increase from 35GW in February.

Analysts believe this growth is mainly due to several factors: First, the market expects a rush to install photovoltaic systems in China in the second quarter of 2025; second, the recovery of demand in the European market; in addition, seasonal factors also play a certain role.

JP Morgan believes that the rebound in photovoltaic demand in the second quarter will improve the supply-demand relationship in the industry and may drive up the prices and profitability of photovoltaic products.

Regarding potential supply-side reforms in the industry, JP Morgan stated that aggressive policy intervention is not part of its baseline scenario. However, if policy intervention does occur, leading companies in the industry will benefit.

Analysts believe that regulatory authorities may set certain standards (such as emission requirements, energy consumption per unit, battery/module conversion efficiency, etc.) to eliminate outdated photovoltaic production capacity, which will benefit industry leaders.

Will Polysilicon Become the Biggest Winner?

Among the various links in the industry chain, JP Morgan believes that polysilicon producers are likely to become the biggest beneficiaries of this market trend.

The research report pointed out that wafer, cell, and module manufacturers can relatively easily increase their capacity utilization, but polysilicon producers will require a longer time to restart production after maintenance. Therefore, there may be a brief supply shortage of polysilicon in the second quarter of 2025.

Regarding the subsequent market trend, JP Morgan holds a relatively optimistic attitude.

Analysts reviewed market performance during the last round of policy expectation warming: from October 17 to 25, 2024, the China Photovoltaic Index rose by 22%, while the Shanghai Composite Index only increased by 3% during the same period.

In contrast, in the current market trend, the China Photovoltaic Index rose by 8% from February 5 to 26, 2025, while the Shanghai Composite Index increased by 5% during the same period. In terms of relative performance, the photovoltaic sector may still have room for growth.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at their own risk