Analysis of the Impact of Polysilicon Price Recovery Under the Photovoltaic Industry's 'Anti-Involution' Policy on the Profitability of Tongwei Co., Ltd. and Hesheng Silicon Industry

Based on the market data and industry information I collected, I will provide you with a comprehensive analysis report.

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Since July 2025, the photovoltaic industry’s ‘anti-involution’ policy has continued to advance, with multiple departments issuing measures around three key directions:

[1][2]. The State Administration for Market Regulation held a compliance guidance meeting in Hefei, Anhui Province, clearly pointing out that ‘involution-style’ competition behaviors such as and in the photovoltaic industry have seriously damaged enterprise interests [1][2]. The Industrial Development Department of the National Development and Reform Commission also clearly stated that during the ‘15th Five-Year Plan’ period, it will comprehensively rectify ‘involution-style’ competition and promote the exit of backward and inefficient capacity through market-oriented and legal means [1].

The latest data as of December 26, 2025 [1][2][7]:

• Polysilicon N-type feedstock
  average price: 53,900 yuan/ton,
  up 54%
  from the end of Q2
• Monocrystalline silicon wafers
  price: 1.2-1.52 yuan/piece,
  up 40%
  from the beginning of Q3
• The main polysilicon contract
  doubled
  in price compared to the end of June, reaching a high of 61,985 yuan/ton on December 17 [4]
• Mainstream enterprises have raised new order quotations to
  about 65,000 yuan/ton or more
  [7]

: In December, there was a huge price gap of up to 18% between the delivery price and the spot price (futures: 59,100 yuan/ton vs. spot: 50,000 yuan/ton), reflecting the market’s for polysilicon prices [4].

As an upstream raw material for polysilicon, industrial silicon prices have also shown a recovery trend. This week, the main industrial silicon contract rose from 8,685 yuan/ton to 8,800 yuan/ton, with a cumulative increase of about 2.19% [3]. The price increase is mainly due to:

• Supply contraction during the dry season
• Production cuts in the southwest region
• Silicon wafer enterprises continuing to implement production cut and load reduction plans (December output is expected to decrease by about 5% compared to November) [1]

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[5]:

• Operating revenue: 91.994 billion yuan
• Severe losses: EPS -1.8012 yuan
• 8 consecutive quarters of losses

[5]:

• Operating revenue: 64.599 billion yuan (down 5.38% YoY)
• EPS: -1.4154 yuan (loss margin
  narrowed compared to 2024
  )
• Feed business contributed 1.5 billion yuan in net profit, becoming a profit ‘stabilizer’

[6]:

• The industry’s anti-involution efforts increased, and policies restricted low-price competition
• Main industry chain prices rebounded and stabilized after falling below almost all enterprises’ cash cost lines
• Tongwei Co., Ltd.'s
  loss amount narrowed significantly month-on-month

:

1. Feed business provides stable cash flow
   : In the first three quarters of 2025, the feed business’s net profit reached 1.5 billion yuan, up 8% YoY, becoming the company’s ‘ballast stone’ when the photovoltaic business was deeply in loss [5]
2. Polysilicon price recovery
   : As a global polysilicon leader, the 54% increase in polysilicon prices compared to the end of Q2 will
   significantly improve gross margin
3. Capacity optimization
   : The company slowed down the pace of new capacity construction and instead increased technical transformation of existing production lines to improve energy efficiency and purity consistency of silicon material production [6]

:

1. Terminal demand has not yet recovered
   : The current industry chain recovery foundation is still not solid, and terminal demand has not yet fully recovered [2]
2. Overcapacity pressure
   : In Q2 2025, the spot price of polysilicon once
   fell below the cash cost line of the entire industry
   , and currently the industry as a whole is still in a state of oversupply with capacity utilization rate less than 60% [7]
3. Inventory accumulation
   : The annual new inventory of silicon material is about 70,000 tons (including imports and exports), and under the pattern of weak supply and demand, the social inventory of polysilicon continued to accumulate in December [7]

: Referring to Tongwei’s profitability at the industry high in 2024 (EPS about 2 yuan), combined with the current industry situation, the short-term ‘reasonable level’ can be defined as:

• Break-even or slight profit
  : EPS returns to the range of -0.5 yuan to 0 yuan
• Mid-term target
  (2026): EPS returns to the range of 0.5-1 yuan

:

1. Short-term
   (Q4 2025-Q1 2026):
   • Polysilicon prices remain in the range of 55,000-65,000 yuan/ton
   • Feed business continues to contribute stable profits
   • Expected to achieve break-even or slight profit

2. Mid-term
   (2026 full year):
   • Capacity integration platform plays a role, accelerating capacity clearance
   • Industry initiative to control production volume at 800,000-1 million tons [2]
   • Terminal demand warms up (expected at the end of Q1 2026)
   • Expected EPS to recover to the range of 0.5-1 yuan

:

• Polysilicon prices do not回调 sharply (maintain above 50,000 yuan/ton)
• Capacity integration policies are effectively implemented
• Terminal demand shows substantial recovery in H1 2026

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Hesheng Silicon Industry is a

in China, not a polysilicon producer. Its main products are:

• Industrial silicon
  (upstream raw material for organic silicon and polysilicon)
• Organic silicon
  (silicone rubber, silicone oil, etc.)

:

• Industrial silicon price rose from 8,685 yuan/ton to 8,800 yuan/ton (weekly increase of 2.19%) [3]
• Expectation of supply contraction during the dry season will continue to support prices

:

• Industrial silicon is the main raw material for polysilicon (industrial silicon accounts for about 30-40% of polysilicon production cost)
• Polysilicon price recovery will
  drive industrial silicon demand

:

1. Product price recovery
   : Industrial silicon prices stabilize and recover
2. Stable cost support
   : Upstream cost pressure is relatively controllable [3]
3. Supply contraction
   : Natural production cuts during the dry season help maintain prices

:

1. Weak demand
   : Downstream organic silicon, aluminum alloy and export markets are all weak [3]
2. Inventory accumulation
   : Industry inventory increased by 5,100 tons [3]
3. Limited short-term upside space
   : Based on the pattern of still weak demand, it is expected that there is not much upside space in the market [3]

Due to the lack of detailed financial data of Hesheng Silicon Industry (incomplete data in search results), inferences are made based on industry rules:

:

• Short-term
  : Industrial silicon price recovery drives gross margin to repair to the range of 10-15%
• Mid-term
  : After supply and demand improvement, gross margin recovers to the range of 15-20%

:

1. Short-term
   (Q4 2025-Q1 2026):
   • Industrial silicon prices remain in the range of 8,500-9,000 yuan/ton
   • Supply contraction during the dry season continues to provide support
   • Expected gross margin to repair to 10-15%

2. Mid-term
   (2026 full year):
   • After polysilicon capacity integration is completed, it will drive industrial silicon demand
   • Terminal demand warms up
   • Expected gross margin to recover to 15-20%

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Indicator	Tongwei Co., Ltd.	Hesheng Silicon Industry
Core Business	Polysilicon + Feed (dual main business)	Industrial silicon + Organic silicon
Relationship with Polysilicon Price	Directly Benefited (polysilicon producer)	Indirectly Benefited (upstream raw material)
2024-2025 Profit Status	8 consecutive quarters of losses, but loss margin narrowed	Weak demand, inventory accumulation
Feed Business	✓ Provides stable cash flow (1.5 billion yuan net profit)	✗ None
Profit Recovery Certainty	High ★★★★☆	Medium ★★★☆☆

[2]:

• Polysilicon capacity integration platform has been established, and it is expected to play a role in integrating capacity in 2026
• Industry initiative to control production volume at 800,000-1 million tons (2025 expected production volume: 1.33 million tons) [2]
• Terminal demand is expected to improve at the end of Q1 2026 [7]

:

1. The price gap between futures and spot is as high as 18%. If the spot price fails to follow the futures rise, there is a risk of correction [4]
2. Under the current pattern of weak supply and demand, actual transaction volume is limited [7]
3. Terminal demand recovery is less than expected

:

• Profit Recovery Certainty
  : High ★★★★☆
• Recommendation Logic
  :

1. Polysilicon price recovery directly improves gross margin
2. Feed business provides a safety cushion (1.5 billion yuan net profit)
3. Capacity optimization and technical transformation enhance competitiveness
4. 2026 capacity integration is expected to further improve supply and demand pattern

• Reasonable Valuation
  : Based on the 2026 EPS expectation of 0.5-1 yuan, giving a PE of 20-25 times, the reasonable value range is 10-25 yuan (need to combine with the latest stock price data)
• Investment Timing
  : The current stock price has回调 sharply (down 23.27% since November 10) [5],
  has medium and long-term allocation value

:

• Profit Recovery Certainty
  : Medium ★★★☆☆
• Recommendation Logic
  :

1. Industrial silicon prices stabilize and recover
2. Supply contraction during the dry season provides short-term support
3. After polysilicon capacity integration, it is expected to drive industrial silicon demand

• Risks
  : Weak downstream demand, inventory accumulation, limited short-term upside space [3]
• Investment Timing
  : It is recommended to wait for the
  terminal demand recovery signal
  (Q1 2026) before allocating

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:

• ✅
  Can achieve recovery with high certainty
• Clear path: Polysilicon price recovery (+54%) + Feed business stabilizer (1.5 billion yuan net profit) + Capacity optimization
• Timeline:
  Break-even in Q4 2025-Q1 2026, return to reasonable profit level (EPS 0.5-1 yuan) in 2026 full year
• Key assumptions: Polysilicon prices maintain above 50,000 yuan/ton, capacity integration policies are effectively implemented

:

• ⚠️
  Can achieve recovery but with medium certainty
• Relatively indirect path: Industrial silicon price recovery (+2.19%) + Supply contraction during dry season + Downstream demand recovery
• Timeline:
  Gross margin repairs to 10-15% in Q4 2025, recovers to 15-20% in 2026 full year
• Key assumptions: Substantial recovery of terminal demand, polysilicon capacity integration drives industrial silicon demand

:

1. Polysilicon price recovery is the
   first step
   of industry recovery, but not a sufficient condition
2. 2026 will be the
   critical period and key year
   for the photovoltaic industry to ‘anti-involution’
3. Capacity integration (800,000-1 million tons production target) and terminal demand recovery are
   core variables
4. Tongwei Co., Ltd. has
   better
   profit recovery certainty and safety than Hesheng Silicon Industry due to dual main business synergy

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[0] Jinling API Data (brokerage data, web search and Python calculation)

[1] Securities Times -