Solar stocks extended their decline in late trading session. As of press time, IRICO NEWENERGY (00438) dropped 5.16% to HK$2.39; XINTE ENERGY (01799) fell 3.73% to HK$7.99; FLAT GLASS (06865) declined 3.36% to HK$11.23; and XINYI SOLAR (00968) decreased 2.63% to HK$3.33.

On the news front, Shandong Provincial Development and Reform Commission recently announced the auction results for Shandong's 2025 new energy electricity price mechanism. The selected solar power capacity totaled 12.48 billion kWh with a winning bid price of 0.225 yuan per kWh.

New Era Futures noted that following the end of the pre-installation rush before the "May 31st" new policy, market-oriented reforms for solar electricity pricing are being advanced. Recent "anti-involution" policies are driving the orderly exit of backward production capacity, and Q4 solar installations may experience significant deceleration.

CITIC Futures indicated that on the supply side, August polysilicon production has rebounded to over 130,000 tons, with September expected to maintain high output levels. In the medium to long term, attention should be paid to whether anti-involution policies will restrict polysilicon supply - if policies are delayed in implementation, high supply levels will persist.

On the demand side, solar installations from January to May showed dramatic growth with cumulative growth of 150%, though this has borrowed from second-half installation demand. June domestic solar installations were only 14GW, with July installations declining further. Considering the expected decline in second-half solar installations and the weakening of battery cell and module export rush demand, polysilicon demand faces continued weakening risks going forward.