Daqo hit by big fall in polysilicon ASP’s

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  Daqo reported second quarter revenue of US$34.3 million, down from US$41.9 million in the prior quarter. Image: Daqo

Financials

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China-based polysilicon producer Daqo New Energy’s financial results were impacted by a sharp decline in polysilicon prices in the second quarter of 2015. 

Daqo reported second quarter revenue of US$34.3 million, down from US$41.9 million in the prior quarter. 

The sales decline was primarily attributed to polysilicon ASP’s declining from US$18.09/kg in the first quarter of 2015, to US$15.95/kg in the second quarter. 

Gongda Yao, CEO of Daqo New Energy, said in an earnings call: “The situation was exacerbated by escalating poly imports from outside of China where we saw an increase of 30% versus the first half of 2014. In particular customer data indicated Korea poly imports increased significantly high by 70% versus the first half of 2014. However, since June we have seen encouraging sign of a strong end market demand with poly prices stabilising.”

The company also noted that it had conducted annual maintenance of its Xinjiang polysilicon facilities, which had affected polysilicon production for five days. As a result, the production volume and sales volume of polysilicon in decreased slightly, compared to Q1 2015.

Polysilicon production volume was therefore 1,734MT in the second quarter, compared to 1,801MT in the prior quarter. Polysilicon sales volume was 1,363MT in, compared to 1,502MT in the first quarter.

The knock-on effect of the lower production due to the annual facility maintenance was that the production cost for polysilicon was said to have increased to US$12.98/kg, compared to US$12.8/kg in the prior quarter. 

Gross profit was around US$$3.6 million, compared to US$8.5 million in the first quarter of 2015.

Daqo also reported wafer sales volume of 18.3 million pieces in the quarter, compared to 18.1 million pieces in the previous quarter. 

With the ‘process in trade’ import exemption expiring at the end of August, Daqo noted that a 4% import tariff in addition to AD and CVD tariff in the range of 2.4% to 57% would be implemented, creating total import tariffs in the order of 6.4% to 61%. 

Daqo expects the import duties to improve the supply and demand situation for polysilicon within China, with polysilicon ASP’s possibly rising again in the fourth quarter of 2015 or in the first quarter of 2016. 

Management noted in the earnings call that it did not expect polysilicon ASPs to make further declines as was trading for many companies at production cost levels. 

The company recently announced plans to expand polysilicon production to reach around 18,000MT annually by the beginning of 2017, providing further scale to reduce polysilicon costs.