Daqo New Energy (DQ) stock surged 7.64% in pre-market trading on Tuesday, outpacing earlier estimates and leading a broader rally in Chinese solar stocks. The dramatic rise comes amid widespread rumors of potential production cuts and price stabilization measures in the polysilicon industry, a crucial material for solar cell manufacturing.

According to reports from China's state-run Securities Times, market speculation suggests that a top polysilicon producer has proposed production cuts to support prices. Furthermore, there are rumors that China's top six polysilicon producers might acquire all remaining production capacity and set a target price range for the material. These potential measures have ignited optimism in the solar sector, with Daqo New Energy, a major polysilicon producer, emerging as a significant beneficiary.

The rumored initiatives come at a critical time for the industry, which has been struggling with overcapacity and plummeting prices. Daqo New Energy reported a substantial loss of $71.84 million in the first quarter, underscoring the challenges faced by polysilicon producers. If the speculated measures materialize, they could provide much-needed support for companies like Daqo New Energy, potentially improving their financial outlook and driving further investor interest in the sector. The polysilicon market has already shown signs of recovery, with prices reaching two-week highs on the Guangzhou Futures Exchange.