China’s first polysilicon futures debuted on Thursday, as a new hedging tool for a market that has been struggling with massive price volatility.

The Guangzhou Futures Exchange is offering seven contracts for delivery starting from June of 2025. The margin requirement is 9% of the contract value. Prices will be allowed to rise or fall by 7% from the previous day’s settlement, with a swing of 14% allowed on the first day of trading.

China is the world’s biggest producer of polysilicon, a key material in solar panels, but the industry is contending with a huge surplus that has seen prices tumble nearly 90% over the past two years. Like other parts of the solar supply chain, far too much capacity has been built relative to demand, which has slashed profitability.

Polysilicon makers have responded by reducing output, including unspecified cuts announced this week by two of the biggest producers Tongwei Co and Xinjiang Daqo New Energy Co.

China is betting on clean tech to drive economic growth, and the Guangzhou exchange has found success trading other green materials such as lithium, used in electric vehicle batteries, which launched last year. Polysilicon options contracts will be added on Dec 27.

  - Bloomberg