Silver falls, can photovoltaics get enough to eat?

Early this morning, Gan Tan Hao posted a moment on social media to mock the photovoltaic industry disturbed by external environments:

"In times of crisis, it turns out that Trump and Musk have teamed up to save the country's photovoltaic industry: one smashed silver prices to reduce costs for the industry, while the other wildly promoted space photovoltaics to paint a grand vision for the industry.

Though a joke, it is also a true reflection.

The nomination of the new chairman of the Federal Reserve has triggered market panic, compounded by the bursting of bubbles accumulated from previous excessive speculation, and high-leverage positions have led to a massacre of longs, resulting in a bloodbath in the silver futures and spot market:

Last night and this morning, COMEX silver futures (New York silver) plummeted by 25.50%, closing at $85.25 per ounce, from yesterday's historical high of $121.785 to this morning's low of $74, with a maximum fluctuation of nearly 40%. The main Shanghai silver continuous contract crashed by 17%, hitting the daily limit down. Without the limit down restriction, the decline would likely have been around 25%.

Those who went long on silver and gold are left with countless losses, but for photovoltaic companies facing life-and-death moments, a huge opportunity has arrived.

Gan Tan Hao simply calculated that Shanghai silver dropped from 32,382 yuan/kg to 24,832 yuan/kg, a drop of 7,550 yuan per kilogram. Without the limit down, it would definitely have easily broken 10,000. What does this mean? The hard cost of each watt of solar cells and each watt of modules has decreased by 0.1 yuan overnight!

Aren't module prices struggling to rise? How about a direct reduction of 0.1 yuan from the cost side? The tough days for integrated battery cell and module companies can finally take a breath. Regardless, if you haven't hoarded high-priced silver or slurry recently, at least this year will be more comfortable!

Chicago silver main futures price; unit: USD/ounce; source: Dongcai Choice

01 The Butterfly Effect of Photovoltaics Has Finally Appeared!

On December 29, 1972, Edward Lorenz gave a speech at the annual meeting of the American Association for the Advancement of Science. The content of the speech is no longer important, but one sentence influenced future generations: Can the flapping of a butterfly's wings in Brazil trigger a tornado in Texas?

Yes, this is the famous butterfly effect.

Before this, hardly anyone could have imagined that an appointment of the Federal Reserve chairman across the ocean would stir up an unprecedented hurricane in the global precious metals market, even affecting the photovoltaic industry on this side of the ocean.

In the past year, Gan Tan Hao has often said that whether it is the rise in silicon material prices or the explosion of overseas energy storage orders, battery module companies have mostly been left to silently weep. While polysilicon futures and precious metal bulls have been celebrating, the mindset of photovoltaic companies has been, "The excitement is theirs; I have nothing." Now, the situation has finally reversed: last night and this morning, long investors were crushed and bankrupted in a panic, while the heavy burden of silver paste on downstream photovoltaic companies has finally lightened a bit, and it seems they can now stop by the roadside to catch their breath. They might even mutter resentfully: "Look, you have your day too!"

Kevin Warsh is the butterfly that triggered the tsunami in precious metals.

On January 30, U.S. President Trump nominated former Federal Reserve Governor Kevin Warsh to be the next chairman of the Federal Reserve, a nomination that still requires approval from the U.S. Senate.

The reason Warsh can create such a huge wave is essentially due to the self-amplifying emotions of market expectations in the gold and silver markets, as well as the fragile resonance of high-leverage positions—now the shorts haven't acted yet (the shorts in the market are either already wiped out or have flipped to long positions, while the shorts outside the market haven't entered), and the longs have already begun to panic and self-destruct.

This is because both silver and gold are non-yielding assets, and their price increases rely entirely on expectations of currency depreciation, safe-haven demand, or growth in industrial demand, and cannot generate cash flow returns like bonds or stocks through interest or dividends.

So-called yielding assets are those that you can hold without needing to trade, buy low or sell high, and periodically receive cash returns out of thin air, with the core being "money makes money, assets generate income." For example, money deposited in a bank earns interest, bonds purchased yield coupon payments, stocks held provide dividends, and rented properties generate rental income. Even buying a financial product can yield fixed returns; these are all yielding assets.

In contrast, silver and gold, as non-yielding assets, have one core essence: simply holding them will never bring you any cash returns. Their core formula (Fisher Effect) is: real interest rate = nominal interest rate - inflation rate. In a scenario of high inflation and low interest rates, when the real interest rate is negative, gold and silver, due to their non-yielding nature, actually avoid the issue of real yield losses, becoming one of the optimal choices to outperform fiat currency depreciation in an inflationary and accommodative context.

It is widely believed that Kevin Warsh will slow down the pace of interest rate cuts: the habitual thinking of "monetary easing → precious metals rising" will change—he is likely to tighten liquidity and restore the credibility of the Federal Reserve after taking office. This expectation instantly breached the psychological defenses of high-leverage longs in the silver market.

At this moment, the precious metals market is already a powder keg: previous funds poured in crazily due to expectations of interest rate cuts, with silver ETF holdings reaching an all-time high and leverage soaring into dangerous territory. When Warsh's nomination became the first spark, cracks immediately appeared in the long camp—some leveraged traders were forced to liquidate due to insufficient margin, and the price drop triggered by these liquidations led to more forced stop-losses, creating a vicious cycle of "long liquidation → price drop → more liquidations." The saying "the shorts haven't even acted yet, and the longs have already killed themselves" is a typical characteristic of a high-leverage market: in a bubble position, even a small emotional disturbance is enough to trigger a self-inflicted collapse.

In fact, there is a key misunderstanding in the market's interpretation of Warsh: most people attribute the crash to his hawkish stance, while ignoring the fact that the previous silver price had already detached from the fundamentals of industrial demand and was entirely driven by financial speculation. Although demand for silver in photovoltaics is growing, it only accounts for 17% of total demand and cannot support the epic rise in silver prices. Warsh's nomination was merely the trigger that popped the bubble, not the fundamental cause of the crash In the early stages, the silver ETF holdings reached a historic high, and the leverage ratio in the futures market soared to a dangerous zone. In this state, even a slight disturbance in sentiment is enough to trigger a chain reaction. The nomination of Wosh is not the fundamental reason for the crash, but rather the fuse that bursts the bubble— the market has long been a "tinderbox," and any reversal of expectations could ignite a stampede event.

While the bulls were still in shock, they suffered a fatal blow, pushing down the prices of gold and silver: the Chicago Mercantile Exchange (CME) announced an increase in the trading margin requirements for Comex gold and silver futures. The margin for non-high-risk accounts for silver will rise from 11% to 15%, and for high-risk accounts, it will increase from 12.1% to 16.5%. The relevant adjustments will take effect after the market closes next Monday. This move is more lethal than Wosh's appointment, directly exacerbating the financial pressure on the bulls and forcing more leveraged positions to be liquidated, which will inevitably amplify the decline further. Thus, this storm triggered by the flutter of a butterfly's wings, under the dual effects of mutual liquidation and regulatory policies, ultimately evolved into an epic collapse in the precious metals market, providing a breather for the photovoltaic industry, which is deeply mired in cost pressures.

However, can photovoltaic companies seize this rare opportunity?

02 Silver price plummets sharply, how does it impact slurry and battery companies?

Two weeks ago, a head of a battery cell company mentioned in a chat with Gan Tan Hao that their company's finance department head personally invested in silver futures, with a cost of two to three hundred thousand, and made over 1.5 million in just over a week. In the one-sided short squeeze market trend for silver, this story is just one of many unremarkable tales of sudden wealth.

In fact, the vast majority of battery companies have already dared not hedge after the silver price exceeded 15,000 yuan/kg. If they get stuck at the peak, compounded by the industry's downturn, it would be a dead end. However, with the recent steep rise in silver and gold prices, whether someone will "take risks" is hard to say. Most speculators always believe they won't be the last to hold the bag.

Last week, Gan Tan Hao had the opportunity to chat with a renowned economist. During our conversation, we discussed that when the biggest bear of Shanghai's housing prices, Xie Guozhong, finally bought a house in Shanghai, he knew that the peak of the industry had truly arrived—because even the last staunch real estate bear had turned into a bull, and there were no more bears left in the market to educate or harvest. This economist is remarkable; as early as 2016, he systematically proposed the real estate bubble and is known as "Mr. Bubble." So now, when the security guard, delivery guys, and others are discussing how to profit from trading gold and silver, this round of market activity is really not far from ending; at least, this is a cyclical peak Rumors in the market are hard to verify, but the sharp drop in silver prices will directly impact the orders being executed by battery and paste companies in the photovoltaic industry chain.

Paste companies are the first to be affected, primarily reflected in cash flow and book impairment, rather than substantial operational losses. The core logic stems from their "silver point linked pricing + production based on sales" operational model.

According to industry research, the current orders being executed by paste companies all adopt a "silver powder procurement price + fixed processing fee" pricing model, where the sales price is linked in real-time to the London silver spot and Shanghai silver futures contract prices, with the processing fee being the core profit source, accounting for 10%-15% of the selling price, which will not be affected by fluctuations in silver prices.

Taking the current conventional silver paste orders as an example, when the silver price is 27,318 yuan/kg, the selling price of silver paste is about 29,318-30,318 yuan/kg (including a processing fee of 2,000-3,000 yuan/kg); after the silver price drops to 16,573 yuan/kg, the selling price simultaneously drops to 18,573-19,573 yuan/kg, while the processing fee remains unchanged.

However, it is important to note that the mismatch in payment terms for paste companies is becoming prominent, which will exacerbate short-term cash flow pressure. According to GanTanHao, paste companies generally procure silver powder on a cash-on-delivery basis or within one month of payment, while the payment terms for selling silver paste to downstream battery companies are generally 3-4 months, often settled by bank acceptance bills. For example, companies like Suzhou Jingyin adopt a "back-to-back procurement" model, where silver powder is paid for immediately, but customer payments are delayed.

Paste companies are most concerned about having already procured high-priced silver powder before shipment. After the sharp drop in silver prices, the silver powder corresponding to the orders being executed has already been purchased, leading to a short-term price difference between high-priced silver powder and low-priced silver paste, which may result in some companies experiencing book impairment. For leading companies like Dike Co., Ltd. and Juhe Materials, the monthly shipment volume is around 150 tons. Even if we calculate based on a monthly order scale of 100 tons of silver paste, if the silver price drops by 10,745 yuan/kg, the book impairment for these companies could exceed 1 billion yuan!

For battery cell companies, however, this is a huge benefit! Because the orders they are executing will overall benefit from the sharp drop in silver prices—only a very small number of special orders with locked prices face slight losses, showing a significant differentiation.

From the order structure perspective, over 90% of the current orders being executed by battery companies are long-term framework contracts, all of which include clauses for silver price linkage adjustments. It is stipulated that if the fluctuation of the London silver spot or Shanghai silver futures contract price exceeds ±5%, the silver paste procurement price can be recalculated. This time, the silver price dropped by 25.5% in a single day, far exceeding the adjustment threshold, allowing battery companies to legally apply for a reduction in the silver paste procurement price, directly lowering production costs.

03 How long can the drop in silver prices last?

According to data published by InfoLink Consulting on January 22, 2026, the proportion of silver paste in the non-silicon costs of TOPCon batteries has reached 62%-64%.

If the silver price drops by 10,000 yuan per kilogram, then the corresponding cost of the battery cell (182*210, N-type TOPCon) at 0.45 yuan/W will decrease from less than 0.30 yuan to 0.20 yuan, directly dropping by 0.10 yuan! The gross profit margin of battery cell companies has increased by 20% overnight!

Calculating based on the leading company's 100GW battery cell production capacity and shipment volume, this means a cost reduction of 10 billion! In a scenario where the sales price of components remains unchanged, this alone is enough to turn most battery cell companies and battery component integration companies from losses to profits! Of course, the component prices may not decrease correspondingly, which could be a false proposition, but let's treat it as a hypothesis. Just thinking about it is also wonderful.

However, behind this "wonderful" situation lie two core questions:

First, is this sharp drop in silver prices a short-term correction or a long-term trend reversal? If it is just a short-term correction, how long is this time window, and is there enough time for photovoltaic companies to take effective measures to lock in silver spot prices?

Second, if photovoltaic companies decisively take measures to buy silver spot now, what if prices continue to fall? Is there a risk of being caught not at the peak but halfway down the mountain?

The Carbon Rush account attempts to make some assumptions and analyses from the dimensions of the essence of the silver market, the response strategies of photovoltaic companies, and value reconstruction, and welcomes everyone to discuss and critique.

The Carbon Rush account believes that this drop in silver prices is a short-term technical correction, not a long-term trend reversal. The reasons are as follows:

First, from the perspective of supply and demand, the structural gap in silver continues to widen, which is enough to support a long-term bull market for silver.

According to the latest data from the Silver Institute, the global silver supply-demand gap will reach 3,200 tons in 2025, and is expected to expand to 4,500 tons in 2026 (about 15% of global annual demand).

The core contradiction of the serious disconnection between silver supply and demand has been analyzed by the Carbon Rush account in the past, roughly as follows:

• Rigid supply shortage More than 70% of the world's silver is produced from copper, lead, and zinc associated mines, and the output is determined by the mining cycle of the main metals. The rise in silver prices is difficult to quickly drive an increase in supply, with the growth rate of mined silver in 2026 expected to be only 0.5%-1.0%.

• Rigid demand as well Silver used in photovoltaics accounts for 35% of industrial demand, with an expected global photovoltaic installation of 350-400GW in 2026, driving silver demand growth of 12%-15%; emerging industries such as AI chips and 5G further increase the proportion of industrial silver usage to 60%.

• Policy constraints In 2025, China's silver mine output is expected to be about 3,450 tons (13.5% of the global total, second in the world), with total consumption exceeding 30,000 tons (over 30% of the global total, first in the world), and industrial demand accounting for 41.3% of the global total, with a supply-demand gap exceeding 5,000 tons and an external dependence of over 50%. For this reason, China has implemented a "one order, one review" licensing management for silver exports starting this year, which is expected to reduce the global circulation by 4,500-5,000 tons per year, objectively exacerbating the tension in the global silver spot market.


Carbon Reduction Number Chart

Secondly, from the perspective of inventory and futures market, the visible inventory of silver has reached a historical low, and the risk of a short squeeze always exists.

Historical experience also shows that silver prices have easily experienced "sharp rises - sharp falls - further sharp rises" under conditions of supply and demand imbalance.

After the Hunt brothers' manipulation case in 1980, the silver price plummeted 90% from $50.35/ounce, but then entered a 20-year period of volatility; in 2011, after reaching $49.82, the silver price corrected by 30%, but this did not change the long-term upward trend.

Currently, the commodity attributes of silver are completely different from those in the 1980s and 2011, with industrial demand dominating. Given the urgent inventory situation, continuously increasing demand, and multiple factors such as residents hoarding silver, the possibility of silver prices remaining stagnant is low.

Future silver prices may trend as follows: short-term volatility will be amplified, but long-term support will hold.

In the short term (1-3 months), due to speculative funds taking profits and regulatory risk warnings, silver prices may fluctuate within the range of 16,000-22,000 yuan/kg, with a volatility range expanding to ±10% per week.

In the medium term (6-12 months), with a persistent supply-demand gap and rising inflation expectations, silver prices are likely to return to above 25,000 yuan/kg, potentially breaking previous highs.

In the long term (1-3 years), with the compound annual growth rate of silver demand from industries such as photovoltaics and AI at 8%-10%, and supply growth below 1%, silver will enter a structural bull market, with the price center gradually rising.

Including Warren Buffett and Duan Yongping, no one can accurately predict the future. The trend of silver in the coming period may be more extreme than the above guesses, either upward or downward. However, regardless of the outcome, we must base our analysis— or more accurately, our assumptions— and systematically plan the operational decisions of photovoltaic companies.

04 How can photovoltaic companies profit from silver price fluctuations?

The Carbon Reduction Number personally suggests that the short-term plunge in silver prices is not a trap of false joy, but a golden window period for photovoltaic companies to strengthen cost defenses and accelerate technological upgrades; the medium to long-term bullish outlook is not a crisis, but also a catalyst for industry differentiation.

The Carbon Reduction Number advises photovoltaic companies to fully capitalize on the low-price dividend in the short term by locking in a low-cost base through tiered procurement for 1-2 years; in the medium term, they should use rights-inclusive trading strategies to hedge against rebound risks, avoiding the awkward situation of "hoarding and then losing"; and in the long term, they should focus on technology to reduce silver usage, establishing a cost structure that does not rely on silver, completely breaking free from price constraints.

As Duan Yongping said, "Do the right thing, do things right." Photovoltaic companies must find the best balance between short-term dividends and long-term risks to navigate the wave of the new energy revolution steadily and far.

The following suggestions are merely theoretical, providing a way of thinking for photovoltaic companies, rather than true solutions.

![](https://mmbiz-qpic.wscn.net/sz_mmbiz_png/8ETOhSDOib6dN8RdUGQzucVX1SU1DlfjuGwWZ62EWs4yNQlxLFvPE3fr8MnEttjELJJ7U2p0EFk6bicaPNUAwTNQ/640? Operational details:

• Gradual position building: Purchase in 3-5 batches within each price range to avoid full position at once, preventing passive losses if prices drop further;
• Contingent clauses: Agree with suppliers on "downside protection"—if the silver price falls below 20,000 yuan/kg within 3 months, the supplier must return 50% of the price difference;
• Capital control: The proportion of funds for silver procurement should be ≤20%, with a monthly demand of 25 tons for 10GW capacity corresponding to approximately 600 million yuan, to avoid occupying cash flow that affects expansion.

Additionally, the Carbon Rush suggests that photovoltaic companies take this opportunity to quickly establish a financial hedging system, using a combination of hedging strategies to lock in the risk of rising long-term silver prices.

In the short term, if silver prices continue to fall (e.g., to 18,000 yuan), spot inventory profits + small losses from selling put options will yield a positive net income; if silver prices rebound in the medium term (e.g., to 30,000 yuan), profits from futures + options will cover the increased costs of spot purchases, locking in a cost ceiling.

Furthermore, the Carbon Rush also suggests that photovoltaic companies sign "short-term fixed price + long-term floating price" agreements with silver paste suppliers:

Lock in a fixed price of 23,000 yuan/kg in the short term (3 months) to fully enjoy the current low prices;

In the long term (3-5 years), adopt a "benchmark price + silver price index linkage," agreeing to activate a price protection mechanism when the annual increase exceeds 20%.

Of course, in the long run, the key for photovoltaic companies is to break free from their dependence on silver. Perhaps when that day comes, silver prices will lose their most important rigid support and return to their true nature.

Source: Carbon Rush Technology

Risk warning and disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not consider individual users' specific investment goals, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at their own risk