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

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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 3.71%.

“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.

Related Link: How To Try Tesla's Autopilot Before Buying It

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:

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

Latest Ratings for DQ

DateFirmActionFromTo
Jan 2016Morgan StanleyUpgradesEqual-weightOverweight
Dec 2015Northland SecuritiesInitiates Coverage onOutperform
Nov 2015Morgan StanleyDowngradesOverweightEqual-weight

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