Polysilicon & Coking Coal Prices Rise in China Amid Supply Reform Hopes

(Digital Phablet) July 23 — The prices of crucial Chinese bulk commodities such as polysilicon and coking coal, which are vital for solar panel manufacturing and steel production, hit new record highs today amid investor expectations that the government will take steps to address oversupply issues.

Polysilicon futures traded on the Guangzhou Futures Exchange surged by 5.5 percent to CNY50,080 (USD6,990) per ton, hitting the maximum daily limit of 12 percent intraday and setting a fresh high since the contract’s inception last December. This contracts’ price has risen by 53 percent so far in July.

Coking coal futures on the Dalian Commodity Exchange jumped 11 percent to CNY1,135.5 (USD159) per ton, marking a four-month high and contributing to a roughly 38 percent increase this month. Meanwhile, coke futures increased by 3.8 percent to CNY1,707.5 (USD238) per ton, up 22 percent throughout July.

Since the start of the month, China has reaffirmed its stance on limiting excessive production of raw materials, following years of weak demand that have depressed prices and profit margins.

During a meeting on July 1, the Central Financial and Economic Affairs Commission highlighted the importance of curbing excessive, chaotic competition at low prices, improving product quality, and encouraging the orderly exit of outdated capacity.

On July 18, Xie Shaofeng, the chief engineer at the Ministry of Industry and Information Technology, announced that upcoming work plans targeting ten major sectors—including steel, non-ferrous metals, petrochemicals, and building materials—are expected to be released soon to support industrial reforms and eliminate outdated capacity.

These policy signals have led the market to anticipate new supply-side reforms that could revive commodity futures prices after recent sharp declines, according to Zhou Fuhang, a researcher at Nanhua Futures, speaking with Digital Phablet.

However, despite the government’s efforts, reducing capacity remains challenging in the short term, and demand for industrial goods has yet to see significant growth. Consequently, increases in bulk commodity prices might face limitations over the medium to long term, an industry insider in the chemical sector told Digital Phablet.

Editors: Dou Shicong, Emmi Laine