Oil prices ride the "roller coaster"! Fossil fuel shortages exposed, with two major alternative tracks in solar storage and coal chemical industry gaining momentum

Financial Daily Reporter: Zhang Baolian    Editor: Chen Junjie

Since 2026, ongoing geopolitical conflicts have continued to escalate, stirring up the global energy markets. International crude oil prices have surged past $110 per barrel, reaching recent high records. However, on March 10, crude oil prices suddenly plummeted sharply, causing a dramatic reversal in trend. The extreme volatility over just a few days has exposed the fragility of fossil fuel supplies and further strengthened the global consensus on energy independence and the promotion of energy transition.

In this special market context, the chemical industry, beyond its core logic of recovery driven by supply and demand resonance, is also seeing extremely promising development opportunities in two major energy substitution sectors: photovoltaic (PV) storage and coal chemical industry. Under the dual drive of policy support and cost advantages, these two sectors are simultaneously undergoing a reassessment of value, resonating strongly with the overall main trend of the chemical industry, and becoming the core focus of current capital markets.

On March 10, industry leaders from companies such as Sungrow and Jinneng Technology told the Daily Economic News (referred to as “the Daily”) that the recent crude oil price fluctuations have been brief, and it is currently too early to determine their specific impact on the photovoltaic industry’s future trajectory. A representative from Trina Solar stated that, in theory, high oil prices support PV installations, but the transmission of this benefit takes time. The final effect depends on how long high oil prices can be maintained, and the market has not yet shown a rapid response.

Lü Jinbiao, an expert consulting for the China Photovoltaic Industry Association, directly told the Daily: “The irreversible trend of energy transitioning from high-carbon to low-carbon and zero-carbon is clear. The recent sharp fluctuations in crude oil prices further highlight the urgency of accelerating the development of PV storage and new energy, and have also prompted developed countries, including Europe, to deeply reflect on the counterproductive energy policies implemented by the U.S. since last year.”

Crude Oil Fluctuations Resurface, PV Storage Becomes a “Strategic Insurance” for Energy Security

The continuous rise and sharp fluctuations in oil prices have once again highlighted the economic and strategic value of new energy. Looking back at the history of global energy markets, whenever international crude oil prices stabilize above $100 per barrel, the global new energy industry tends to enter an accelerated development cycle. This is often accompanied by increased policy support and heightened corporate investment enthusiasm, creating a two-way resonance. Coupled with the core energy security attribute of PV storage systems, what was once a purely economic choice has been upgraded to a necessary “strategic insurance” for countries to ensure energy supply.

The Daily’s review of Brent crude oil futures settlement prices and the comprehensive value index (SPI) for the PV industry—covering polysilicon and silicon wafer prices—over the past six years shows a strong correlation between crude oil prices and the prices of core raw materials in the PV supply chain.

According to Wind data compiled by the Daily:

Specifically, in March 2022, international crude oil prices approached $130 per barrel, prompting a significant rise in polysilicon prices. By June 2022, crude oil prices gradually fell from the high of $120 per barrel, and polysilicon and silicon wafer prices also declined in tandem, showing a very clear linkage.

Cinda Futures analyst pointed out that ongoing turmoil in the Middle East has led market funds to focus on the energy transition sector, with PV as a core segment of new energy, attracting active investment in both silicon and silicon products. However, they also warned that the current fundamentals of polysilicon are relatively weak. If geopolitical conflicts ease and oil prices fall, related funds are likely to retreat, and sector prices may approach cost levels.

The fixed asset investment in the PV industry is also closely linked to oil price trends.

The pace of fixed asset investment in the PV industry is highly correlated with oil prices. From 2020 to 2021, as oil prices rebounded from lows of $35 per barrel to $86, PV fixed assets began expanding. According to the Daily’s statistics of 48 PV companies’ fixed asset balances at the end of reporting periods, total assets increased from 178.688 billion yuan to 213.752 billion yuan. When oil prices peaked in 2022, the fixed asset balance at the end of 2023 increased by over 100 billion yuan compared to the end of 2022, reaching a high growth rate for the industry. In 2024, as oil prices temporarily declined, PV fixed assets continued to grow but at a slower pace.

On the policy front, major global economies are increasing support for new energy. Domestically, policies focus on energy security and independence, with regions continuously strengthening energy storage support. Some areas have introduced mandatory storage requirements for distributed PV projects, with regional differences in implementation. Overseas, the EU promotes new energy and energy storage development through legislation, market mechanisms, and industrial policies.

According to the China Photovoltaic Industry Association’s forecast, domestic new PV installations will reach 180–240 GW in 2026; globally, the demand for new energy installations continues to grow, with an expected 580–600 GW of new PV capacity added worldwide in 2026. Large projects in the Middle East, Europe, and Latin America are intensively bidding, driving demand.

In terms of corporate investment, leading companies are expanding capacity deployment. Industry trends and institutional forecasts suggest that in the first quarter of 2026, exports of energy storage inverters will continue to grow rapidly, especially in Europe and the Middle East, driven by energy security needs caused by geopolitical conflicts. In the long term, the logic of energy independence will continue to boost PV installation demand. As oil prices remain high, the risks associated with fossil fuel supply and price fluctuations will further intensify, and dependence on renewable energy will keep increasing.

Coal Chemical Industry as a Clear Beneficiary of Substitution

The sharp fluctuations in oil prices have also caused volatility in petrochemical product prices, with limited cost pass-through to downstream industries, squeezing profit margins. The coal chemical industry shares some products with the petrochemical industry, such as olefins, which can be produced via crude oil or coal routes. Therefore, in high oil price environments, coal chemical costs demonstrate a comprehensive advantage, making it a key sector for energy substitution.

An anonymous chemical industry analyst pointed out that coal chemical carries strategic value for energy independence at the national level, effectively reducing reliance on overseas oil. Under high oil prices, products derived from coal have significant cost substitution advantages over oil-based chemicals, with expanding product price spreads and strong profit elasticity.

“The domestic coal price is tightly controlled by supply stabilization policies, making price increases manageable. This continuously enhances the cost advantage of coal-based methanol, oil, and other chemical products,” the analyst said.

Meanwhile, geopolitical conflicts in the Middle East have disrupted shipping through the Strait of Hormuz, limiting exports of methanol and urea from Iran and other major producers, creating supply gaps in global chemical markets. Domestic coal chemical companies, leveraging cost and capacity advantages, are well-positioned to meet overseas demand and further expand profits.

Recently, Jia Sanbao, Secretary of the Board at Xinghua Co., told the Daily that if methanol prices remain high, with profits surpassing those of downstream products like ethanol and methylamine, the company would reduce downstream deep-processing activities and directly increase methanol exports.

Several analysts noted that the coal chemical industry is affected by dual controls on carbon emissions, which restrict supply expansion. “Domestic chemical companies, with their scale and cost advantages from previous capacity expansions, are expected to seize overseas market share, accommodate global demand shifts, and benefit from imported inflation,” they said.

According to Wind’s China Chemical Product Price Index (CCPI), in December 2025, the index hit a low of 3,930 points, then rebounded to around 4,100 points in January 2026. During the peak season after the Spring Festival, combined with rising oil costs, the index surged above 5,000 points by March 9, indicating sustained industry prosperity.

The coal-based urea sector particularly benefits, as disruptions in Middle Eastern urea exports have led to global supply tightening. Domestic coal urea producers, with cost advantages, have seized international market share, with exports increasing by 67% year-on-year, and leading companies operating at full capacity.

Daily Economic News