Spot prices in China's photovoltaic industry recently rebounded, with N-type polysilicon prices rising by 6.3% WoW to approx. RMB35.6 per kg, JPMorgan published a research report saying.

Against the backdrop of government policies aimed at curbing involution, raw material prices are approaching the marginal production cost of about RMB48 per kg. The broker anticipated that, if prices continue to rise to the marginal cost line, polysilicon suppliers and leading photovoltaic glass companies with cost advantages will benefit the most.

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Currently, only polysilicon and photovoltaic glass in the photovoltaic industrial chain still have significant cost differences, JPMorgan added. Taking polysilicon as an example, if the spot price rises to RMB48 per kg, DAQO New Energy (DQ.US)      is estimated to break even, while TONGWEI(600438.SH)  +0.470 (+2.331%)   could achieve a ROE of about 5%.

The broker also predicted that leading photovoltaic glass companies will have about a 15% cost advantage over marginal producers, and thus expected XINYI SOLAR (00968.HK)  +0.010 (+0.341%)    Short selling $69.59M; Ratio 23.812%   and FLAT GLASS (06865.HK)  -0.020 (-0.199%)    Short selling $6.25M; Ratio 9.999%   to achieve a ROE of 7%. Currently, JPMorgan rated both XINYI SOLAR and FLAT GLASS at Neutral.
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