Since the beginning of August, China’s solar cell market has staged a sharp reversal. TOPCon cell prices bottomed out in late July and rebounded rapidly. Compared with the lows seen from late July to early August, mainstream prices as of August 18 had risen by more than 20% across major formats, with gains in some specifications approaching 30%. The rally was initially supported by a rising cost floor. Since mid-August, however, the pace of price increases has clearly exceeded what can be explained by cost recovery alone. Following the rollout of the U.S. Section 232 measures, expectations for front-loaded procurement across supply chains serving the U.S. market have intensified. Traders have increasingly become marginal buyers of higher-priced cells, further amplifying gains in the spot market. In contrast, domestic module manufacturers remain reluctant to accept current high cell prices. This means that while the market is being supported by the policy window and export-related stockpiling, whether the rally can evolve from a short-term move into a more sustainable uptrend will ultimately depend on whether higher cell costs can be passed through to module prices and whether domestic demand can take over once the policy-driven export window begins to close. Current Market: Cost Recovery Sets the Floor, Export Stockpiling Amplifies the Rally The market began to reverse rapidly in August. According to SMM data, as of August 18, mainstream price ranges for TOPCon G12R, M10 and G12 cells had risen to RMB 0.316-0.367/W, RMB 0.316-0.367/W and RMB 0.319-0.352/W, respectively. Offers for some G12R and M10 cells briefly reached around RMB 0.38/W. Costs provided the initial foundation for the rebound. Since late July, stronger expectations for higher polysilicon prices, a rapid recovery in wafer prices, and rising costs for silver paste and other auxiliary materials have jointly lifted the cost floor for solar cells and strengthened producers’ willingness to hold firm on offers. However, cost movements can largely explain why prices were able to rebound from low levels; they do not fully explain the pace of gains since mid-August. The stronger driver behind the acceleration has been rapidly rising expectations for advance procurement following the rollout of the U.S. Section 232 measures. On August 6, the United States formally announced Section 232 measures covering polysilicon and its derivatives. The measures set minimum import prices of $0.22/W for solar cells and $0.38/W for solar modules. They will take effect at 12:01 a.m. U.S. Eastern Time on December 4, 2026, for covered products entered for consumption or withdrawn from warehouse for consumption. Certain polysilicon derivatives listed in the announcement will also be subject to additional ad valorem duties. The transition period between the announcement and implementation has prompted front-loaded procurement and inventory building across the Asian solar supply chain serving the U.S. market. Based on current transaction patterns, this incremental demand is becoming an increasingly important marginal driver in the spot market. According to feedback from supply-chain traders surveyed by SMM, the market could see around 15-20 GW of solar cell stockpiling demand during the policy window, with traders also emerging as key buyers of some higher-priced material. It is important to stress that the 15-20 GW figure remains an industry survey estimate and market expectation. It does not represent volumes that have already been contracted, prepaid, assigned shipping schedules or exported. Only if a substantial portion of this expected demand is ultimately converted into actual purchase orders will it materially affect near-term cell shipment flows and spot inventories. Module Makers: Domestic Demand May Take Over, but Acceptance of High Cell Prices Remains Limited Compared with traders, domestic module manufacturers remain cautious about purchasing high-priced cells. On the one hand, domestic project demand is expected to improve in Q4, which could support a sequential recovery in module production schedules and cell procurement. On the other hand, module producers remain constrained by end-market tender prices, project returns and their own inventory positions. At present, module makers generally view RMB 0.33-0.35/W as a more acceptable procurement range for solar cells. In terms of cost pass-through, solar cells have responded relatively quickly in the current round of price increases, but whether module prices can rise in tandem remains uncertain. If module selling prices fail to absorb the increase in cell costs, module producers are more likely to delay procurement, reduce safety inventories, prioritize internally produced cells or adjust production schedules rather than continue chasing higher-priced external supply. This is likely to lead to greater market segmentation. Cell producers with well-secured export orders may be able to maintain firmer offers, while standard domestic orders and more abundantly supplied formats may remain subject to pricing pressure from module makers. As a result, the current rally is more likely to remain structural rather than develop into a synchronized increase across all formats and all producers. Why Could Mid-October Become a Key Turning Point? It is worth noting that the Section 232 measures do not provide an unrestricted window for imports ahead of implementation. The U.S. presidential proclamation also states that if the Secretary of Commerce determines that a company has stockpiled polysilicon or its derivatives before the measures take effect, the department may coordinate with U.S. Customs and Border Protection to impose import restrictions. Advance procurement by traders therefore should not be viewed as risk-free front-loading. How U.S. authorities distinguish between normal inventory preparation and policy-avoidance stockpiling, as well as how strictly the provision is ultimately enforced, could also affect actual shipment flows. The Section 232 measures are scheduled to take effect on December 4, 2026. According to trader feedback, arranging shipments from China or other major Asian production hubs, completing ocean freight and clearing U.S. customs generally requires at least around 40-45 days. Working backward from the implementation date, shipments intended to enter the U.S. before the new measures take effect may therefore need to depart by around mid-October to provide a more comfortable logistics buffer. From a procurement perspective, the closer the market gets to mid-October, the less time remains to arrange new export orders, which could gradually reduce traders’ willingness to chase higher prices. Assuming no major changes in logistics conditions, trader purchasing patterns or subsequent U.S. implementation rules, the market could follow a baseline pattern in which export-related stockpiling continues to support orders and prices through August and September. As the available shipping window narrows and compliance risks rise in October, new inquiries may gradually decline. If incremental export procurement weakens materially by mid- to late October, domestic module producers could once again become more influential in setting solar cell prices. Q4 Outlook: Domestic Demand May Provide a Floor, but Correction Risks Rise After October From a supply-demand perspective, the solar cell market could see two distinct phases of demand in Q4. The first phase is concentrated procurement linked to front-loaded exports. Such orders tend to be released quickly and are highly sensitive to delivery timing. Traders may be willing to pay a certain premium to secure product within the available policy window, helping reduce inventories at cell producers and providing continued support to prices. The second phase would depend more heavily on domestic demand. Q4 project deliveries could lift module production schedules and, in theory, increase solar cell consumption. However, domestic module producers are much more cost-sensitive than traders purchasing against a time-limited export window. Their procurement is more closely tied to immediate production needs, and they are less willing to absorb elevated prices. In other words, stronger domestic demand could provide downside support, but may not be sufficient to sustain the high prices created during the export-driven procurement window. Based on this logic, SMM expects solar cell prices to remain relatively firm through August and September, while upward momentum could gradually weaken after entering October. If new export orders begin to decline from early October while module producers continue to resist higher prices, the probability of a downward shift in transaction prices will increase in mid- to late October. The scale of any correction will depend on the actual volume purchased by traders, incremental production at cell manufacturers and the strength of domestic module demand. At the same time, if a substantial portion of the expected 15-20 GW of stockpiling demand is converted into trader purchases but downstream consumption ultimately lags the pace of earlier inventory building, stock pressure could increase once the policy window closes. If part of the material remains in trader inventories or overseas warehouses, subsequent channel restocking demand may effectively have been pulled forward, potentially weakening export orders further in November and December. Three Indicators to Watch First, changes in the volume and pricing of solar cell purchases by module manufacturers. If higher-priced transactions remain concentrated among traders while module makers continue to procure only on a low-inventory, just-in-time basis, the rally will still lack sustained downstream support. Second, cell producer inventories and production schedules. If manufacturers rapidly increase output in response to stronger export orders, but the additional production encounters weaker export demand after October, inventories could begin building again and amplify downward price pressure. Third, order divergence among different cell formats. High-efficiency products and formats better suited to export demand may remain relatively firm, while more abundantly supplied products primarily serving the domestic market could feel pricing pressure from module makers earlier. Overall, the impact of the current Section 232-driven market on China’s solar cell sector can be summarized as “near-term export-led destocking, a shift in demand drivers around October, and a return to domestic fundamentals in Q4.” With traders still driving a significant share of high-priced procurement and module producers yet to broadly accept current cell prices, the rally remains clearly cyclical and structural in nature. As the front-loading window narrows after mid-October, the risk of a correction in solar cell prices is likely to rise materially.

[SMM Silicon-Based PV Morning Meeting Minutes: Wafer Prices Up Nearly 30%, Solar Cell Prices Shot Up Across All Sizes] Wafer: Prices for all sizes rose significantly, with 18X up nearly 30%, and second- and third-tier enterprises generally following the increase. Production in August fell 1-2 GW MoM; top-tier players proactively implemented production cuts as prices fell below cash cost and inventory remained elevated, and the total volume and allocation of external toll processing were also adjusted. Solar cell: Prices across all sizes continued to shot up sharply, with mainstream transactions for 210R, 183, and 210N rising to 0.31-0.345, 0.31-0.35, and 0.31-0.336 yuan/W, respectively.

This week, operations across the industry chain continued to diverge. The lithium segment remained relatively strong: an upward shift in the price center of lithium carbonate drove ore prices and lithium hydroxide higher, but salt plants became less willing to accept high-priced ore, and further gains were still constrained by margins. Lithium carbonate futures retreated from highs, while spot inquiries and transactions improved somewhat; downstream demand was still dominated by just-in-time procurement. Some metal salts and intermediate product markets remained weak, with more low-priced supply and muted actual transactions; nickel sulphate held steady, but spot orders were under pressure. Ternary cathode precursor prices were weak due to softer raw materials, while ternary cathode material continued to rebound, supported by a rebound in lithium chemicals and stockpiling ahead of the peak season. LFP supply and demand remained in a tight balance; tight raw materials, declining inventory, and rising processing fees strengthened cathode enterprises’ bargaining power. The anode, separator, and electrolyte segments were broadly stable, while supply bottlenecks persisted in parts of the sodium-ion battery chain. On the recycling side, demand for LFP electrode was active, while transactions in high-metal-content black mass were cautious; going forward, focus will be on whether peak-season demand materializes and how raw material price pass-through evolves.

At the beginning of the week, the industry chain as a whole continued a weak and divergent pattern. Trading in upstream raw materials and lithium chemicals remained sluggish, with a wide psychological price spread between sellers and buyers. Some low-priced supply continued to be released, and the price center remained under pressure. The electrolysis products, intermediate products, and powder markets all lacked clear demand support. Downstream players mainly relied on just-in-time procurement and cargo pick-up under long-term contracts, with limited spot order activity. The precursor market stayed in the doldrums, affected by declines in some raw material prices. Top-tier players saw some recovery in export orders and production schedules in China, but small and medium-sized enterprises were still constrained by the off-season. Cathode material prices edged up, driven by a rebound in lithium chemicals prices and stockpiling ahead of the traditional peak season, while demand from the European auto market also provided some support. The consumer electronics-related materials market delivered mediocre performance, and price cuts have not yet materially improved shipments. At the industry level, lithium-ion battery production in January–July rose 40.2% YoY. Meanwhile, “anti-involution” governance in key industries continued to advance, and improvements in the supply-demand structure and price order remain worth watching.

[Iran] Last week, Iranian slab returned to the export market, but trading remained cautious due to weak domestic demand and a wide gap between buyer and seller expectations. A major steel mill recently sold 50,000 tonnes of slab through the Iran Mercantile Exchange (IME) at around USD 427/t FOB Imam Khomeini Port, while another mill offered August–September shipment material at USD 430/t FOB Bandar Abbas. However, amid rising geopolitical risks and high freight costs, buyers generally pushed for lower prices to offset logistics expenses. In the flat steel market, prices remained broadly stable, but government price controls and subdued trading activity continued to limit any meaningful recovery, with most market participants maintaining a wait-and-see stance.

National Bureau of Statistics (NBS) reported: From January to July, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, effectively responded to various external shocks and internal difficulties, focused on implementing more proactive and effective macro policies, and solidly advanced high-quality development. Production and supply grew steadily, employment and prices remained generally stable, resilience in foreign trade continued to stand out, new growth drivers expanded and strengthened, and overall economic performance remained stable, sustaining a development trend featuring renewed momentum and an improved structure. From January to July, the value added of industrial enterprises above the designated size nationwide increased by 5.3% YoY. By the three major sectors, value added in mining increased by 2.5% YoY, manufacturing by 5.6%, and the production and supply of electricity, heat, gas and water by 5.4%. Value added in equipment manufacturing increased by 9.7% YoY, and value added in high-tech manufacturing increased by 13.8%, respectively 4.4 and 8.5 percentage points faster than the overall value added of industrial enterprises above the designated size. In July 2026, the value added of industrial enterprises above the designated size increased by 4.5% In July, the value added of industrial enterprises above the designated size increased by 4.5% YoY in real terms (all value-added growth rates are real growth rates after deducting price factors). On a MoM basis, in July, the value added of industrial enterprises above the designated size increased by 0.11% from the previous month. From January to July, the value added of industrial enterprises above the designated size increased by 5.3% YoY. By the three major sectors, in July, value added in mining decreased by 4.2% YoY, manufacturing increased by 5.5%, and the production and supply of electricity, heat, gas and water increased by 5.0%. By ownership type, in July, value added of state-controlled enterprises increased by 1.6% YoY; joint-stock enterprises increased by 5.0%, and foreign-funded enterprises as well as enterprises with investment from Hong Kong, Macao and Taiwan increased by 2.8%; private enterprises increased by 3.7%. By industry, in July, among the 41 major industry categories, 25 industries maintained YoY growth in value added. Specifically, coal mining and washing declined by 10.8%, oil and natural gas extraction increased by 6.1%, processing of agricultural and sideline food products increased by 3.8%, manufacturing of liquor, beverages and refined tea increased by 2.6%, textiles increased by 2.3%, manufacturing of chemical raw materials and chemical products declined by 1.2%, manufacturing of non-metallic mineral products declined by 3.3%, smelting and pressing of ferrous metals increased by 0.3%, smelting and pressing of non-ferrous metals declined by 2.5%, manufacturing of general-purpose equipment increased by 9.5%, manufacturing of special-purpose equipment increased by 12.6%, automobile manufacturing increased by 8.7%, manufacturing of railway, ship, aerospace and other transport equipment increased by 13.6%, manufacturing of electrical machinery and equipment increased by 8.8%, manufacturing of computers, communications and other electronic equipment increased by 19.1%, and the production and supply of electricity and heat increased by 5.3%. By product, in July, output increased YoY for 279 of the 626 products produced by industrial enterprises above designated size. Specifically, steel products totaled 116.46 million mt, down 4.1%; cement 126.71 million mt, down 11.6%; ten nonferrous metals 6.97 million mt, up 2.5%; ethylene 3.48 million mt, up 0.1%; automobiles 2.529 million units, down 0.1%, including NEVs at 1.55 million units, up 29.9%; power generation 943.9 billion kWh, down 0.1%; and crude oil processing volume 53.11 million mt, down 15.8%. In July, the sales-to-production ratio of industrial enterprises above designated size was 96.9%, down 0.6 percentage points YoY; the export delivery value realized by industrial enterprises above designated size was 1,413.3 billion yuan, up 10.4% YoY in nominal terms. From January to July, the national economy remained generally stable and maintained a development momentum toward new and better growth. From January to July, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while maintaining stability, effectively responded to various external shocks and internal difficulties, focused on implementing more proactive and effective macro policies, and solidly advanced high-quality development. Production and supply grew steadily, employment and prices were generally stable, foreign trade resilience continued to stand out, new growth drivers expanded and strengthened, and overall economic performance remained generally stable, sustaining a development momentum toward new drivers and a better structure. I. Industrial production grew rapidly, with strong growth in the equipment manufacturing sector and high-tech manufacturing sector From January to July, the value added of industrial enterprises above designated size nationwide increased by 5.3% YoY. By three major sectors, value added increased by 2.5% YoY in mining, 5.6% in manufacturing, and 5.4% in the production and supply of electricity, heat, gas, and water. Value added increased by 9.7% YoY in the equipment manufacturing sector and by 13.8% in the high-tech manufacturing sector, exceeding the overall growth of industrial enterprises above designated size by 4.4 and 8.5 percentage points, respectively. By ownership type, value added increased by 3.9% YoY for state-controlled enterprises; 5.8% for joint-stock enterprises; 3.1% for enterprises with investment from foreign countries and from Hong Kong, Macao and Taiwan; and 4.5% for private enterprises. By product, the production of 3D printing equipment, lithium-ion batteries, and industrial robots increased YoY by 52.3%, 40.2%, and 28.5%, respectively. In July, the value added of industrial enterprises above designated size nationwide increased by 4.5% YoY and by 0.11% MoM. In July, the manufacturing PMI was 49.2%, and the expectations index for enterprise production and business activities was 54.1%. From January to June, industrial enterprises above the designated size nationwide recorded total profits of 3,948 billion yuan, up 18.7% YoY. II. The Service Sector Maintained Steady Growth, With Modern Services Showing Positive Momentum From January to July, the national service sector production index rose 4.7% YoY. By industry, the production indices for information transmission, software and information technology services; leasing and business services; financial services; and transportation, warehousing and postal services increased 10.6%, 9.5%, 6.3%, and 5.1% YoY, respectively. In July, the national service sector production index rose 4.3% YoY. In July, the business activity index for the service sector was 49.3%, and the business activity expectations index for the service sector was 56.0%. Among them, the business activity indices for industries such as postal services, telecommunications, radio and television and satellite transmission services, and culture, sports and entertainment were in the relatively high prosperity range of 55.0% or above. From January to June, operating revenue of service enterprises above the designated size rose 5.9% YoY. III. Market Sales Expanded, With Faster Growth in Service Retail Sales From January to July, total retail sales of consumer goods and services rose 2.6% YoY, of which service retail sales increased 5.0% and goods retail sales increased 1.1%. Within service retail sales, retail sales in categories such as communications and information services, tourism consulting and leasing services, and cultural, sports and leisure services grew relatively quickly. From January to July, total retail sales of consumer goods reached 28,774.4 billion yuan, up 1.2% YoY. By location of business unit, urban retail sales of consumer goods were 24,928.5 billion yuan, up 1.1% YoY; rural retail sales of consumer goods were 3,845.9 billion yuan, up 2.4%. By type of consumption, goods retail sales were 25,492.2 billion yuan, up 1.1% YoY; catering revenue was 3,282.2 billion yuan, up 2.6%. Sales of basic necessities and some upgraded goods grew relatively quickly, with retail sales of grain, oil and food; communications equipment; and cosmetics by units above the designated size rising 7.2%, 15.1%, and 6.3% YoY, respectively. In July, total retail sales of consumer goods were 3,902.2 billion yuan, up 0.6% YoY and up 0.06% MoM. From January to July, nationwide online retail sales of goods and services were 11,721.4 billion yuan, up 4.8% YoY. Of this total, online goods retail sales were 7,396.5 billion yuan, up 4.6%; online services retail sales were 4,324.9 billion yuan, up 5.2%. IV. Fixed-Asset Investment Declined, While Investment in Intellectual Property Products Grew Rapidly From January to July, nationwide fixed-asset investment (excluding rural households) was 26,032.8 billion yuan, down 6.7% YoY; fixed-asset investment excluding real estate development fell 3.7%. Among them, investment in intellectual property products rose 9.1% YoY. By sector, infrastructure investment fell 3.6% YoY, manufacturing investment fell 1.7%, and real estate development investment fell 19.2%. Nationwide, the floor space of commercial buildings sold (newly built) totaled 450.21 million m², down 11.8% YoY; sales of newly built commercial buildings totaled 4,271.8 billion yuan, down 13.1%. By industry, primary industry investment fell 0.5% YoY, secondary industry investment fell 2.1%, and tertiary industry investment fell 9.5%. Private investment fell 9.4% YoY; excluding real estate development, private investment fell 5.7%. Investment in high-technology industries rose 5.0% YoY, with investment in information services, aircraft and spacecraft and equipment manufacturing, and electronic and communications equipment manufacturing rising 19.2%, 12.3%, and 7.1%, respectively. In July, fixed asset investment (excluding rural households) fell 1.42% MoM. V. Goods Imports and Exports Grew Rapidly, and the Trade Structure Continued to Improve From January to July, total goods imports and exports reached 30,126.4 billion yuan, up 17.3% YoY. Of this total, exports were 17,440 billion yuan, up 14.0%; imports were 12,686.4 billion yuan, up 22.0%. From January to July, imports and exports under Ordinary Trade rose 10.2% YoY. Imports and exports with Belt and Road partner countries rose 15.5%. Imports and exports by private enterprises rose 17.2%, accounting for 56.9% of the total. Exports of mechanical and electrical products rose 21.2%, accounting for 63.8% of total exports. In July, total goods imports and exports reached 4,658 billion yuan, up 19.2% YoY. Of this total, exports were 2,712.5 billion yuan, up 17.8%; imports were 1,945.4 billion yuan, up 21.2%. VI. The Employment Situation Remained Generally Stable, and the Urban Surveyed Unemployment Rate Rose Seasonally From January to July, the national average urban surveyed unemployment rate was 5.2%, unchanged from January to June and the same period last year. In July, the national urban surveyed unemployment rate was 5.2%, up 0.2 percentage points from the previous month. The surveyed unemployment rate for the local registered labor force was 5.2%; that for the migrant registered labor force was 5.2%, including 4.9% for the migrant agricultural registered labor force. The urban surveyed unemployment rate in 31 major cities was 5.2%, up 0.2 percentage points from the previous month. The national average weekly working hours for enterprise employees were 48.2 hours. VII. Market Prices Rose Mildly, and the Increase Moderated Somewhat in July From January to July, the national consumer price index (CPI) rose 0.9% YoY. By category, prices of food, tobacco and alcohol, and dining out fell 0.2% YoY; clothing prices rose 1.6%; housing prices fell 0.2%; prices of household goods and services rose 1.7%; transport and communications prices rose 1.6%; education, culture and entertainment prices rose 1.2%; healthcare prices rose 2.1%; and prices of other goods and services rose 10.8%. Among food, tobacco and alcohol, and dining-out prices, pork prices fell 13.4%, grain prices fell 0.3%, fresh fruit prices rose 1.1%, and fresh vegetable prices rose 3.5%. In July, the national CPI rose 0.5% YoY and fell 0.1% MoM. From January to July, the core CPI excluding food and energy prices rose 1.1% YoY. Of this, the core CPI rose 0.9% YoY in July. From January to July, national industrial producer EXW prices rose 1.8% YoY. Of this, they rose 3.5% YoY and fell 0.7% MoM in July. From January to July, national industrial producer purchase prices rose 2.8% YoY. Of this, they rose 5.5% YoY and fell 1.0% MoM in July. Overall, from January to July, the national economy operated generally steadily, maintaining a development momentum toward new, better, and improved. However, it should also be noted that the external environment is complex and volatile; in China, the contradiction of strong supply and weak demand is prominent; some enterprises face operational difficulties; and the foundation for the economy’s steady improvement still needs to be consolidated. In the next stage, we should adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guidance, uphold the general principle of pursuing progress while ensuring stability, fully, accurately, and comprehensively implement the new development philosophy, accelerate the building of a new development paradigm, remain committed to deepening reform and opening up, accelerate efforts to replace old growth drivers with new ones, step up counter-cyclical adjustments, intensify efforts to expand domestic demand and optimize supply, effectively safeguard and improve people’s wellbeing, strengthen development momentum and invigorate social vitality, and promote sustained economic development toward new, better, and improved.