Polysilicon Futures and Options To Start Trading On Guangzhou Exchange

In what is probably a global first, the Guangzhou Futures Exchange will introduce polysilicon futures and options starting just after Christmas, which should support allowing China’s solar industry to hedge against price volatility. China has an over 90% share of global capacity of 1.6 million tonnes in polysilicon manufacture, and close to 80% in the broader solar sector. The sector has been beset with losses due to massive overcapacity and falling prices since late 2023. The Guangzhou exchange itself was set up in 2021 with focus on the green economy. Polysilicon is the first processed part of the solar manufacturing cycle, where it is further processed into ingots, wafrs, cells and finally, module assembly.

Polysilicon futures contracts will be listed on Dec. 26 and options contracts the next day, the bourse announced on Dec. 13. These will be the third set of futures and options products launched by the GFEX, following industrial silicon and lithium carbonate, which began trading in December 2022 and July last year. China controls over 70% of the global Lithium carbonate market as well.

The first batch of seven polysilicon futures and related options will have minimum trading volumes of three tons. The minimum price fluctuation, or tick size, for the futures contracts will be CNY5 (Rs 58) per ton, while the smallest change in the price paid for the options contracts will be CNY1 or Rs 11.66 per ton.  At under USD 6 per kg, polysilicon prices have fallen over 40% this year.

A futures and options market in these commodities will provided very useful price signals to manufacturers and customers, besides liquidity to some manufacturers