Here's A Way To Play Stronger Poly-Si Prices In The Solar Sector

There may be a way for traders to profit from rising polycrystalline silicon (Poly-Si) prices.

After speaking with an industry insider in China, Axiom analyst Gordon Johnson learned that the Chinese government began a customs investigation into Poly-Si imports earlier this month.

Johnson believes this news will benefit Chinese Poly-Si makers the most, especially pure-play Daqo New Energy Corp DQ.

“Thus, as protectionism from China in the poly market should benefit Chinese poly makers the most (while this is an incremental positive for GCL given GCL uses ~80% of its poly to make wafers, we see this as much more of a benefit for the pure-play poly makers—i.e., DQ), & from our cost curve analysis we see n-term upside as likely for select Chinese poly vendors, w/DQ positioned as the clear winner,” Johnson explains.

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Johnson remains bearish on most solar stocks, but noted he was impressed by the 1.2 GW of new installations in Indian in March and has raised Axiom’s 2016 total global installation estimate from 44.0 GW to 44.7 GW.

Axiom maintains Sell ratings on the following solar stocks:

• Sunedison Inc SUNE
• JA Solar Holdings Co., Ltd. (ADR) JASO
• Trina Solar Limited (ADR) TSL
• Yingli Green Energy Holding Co Ltd (ADR) YGE
• SolarCity Corp SCTY

Disclosure: the author holds no position in the stocks mentioned.