As its polysilicon production expansion plans remain on track, Daqo New Energy expects demand from domestic Chinese market to pick up pace in the second half of 2019 which would improve the demand situation, especially for mono-grade polysilicon. (Source: Daqo New Energy)
- Daqo New Energy’s Q1/2019 polysilicon production volume Of 8,764 MT exceeds management guidance of which it sold 8,450 MT externally, an improvement of 56% a year back
- Net income for the company decreased 79% YoY along with revenues that slumped 15% on annual basis
- Company is confident of achieving its production capacity expansion milestones with planned debottlenecking work
- Daqo said it expects to sell 7,100 MT to 7,300 MT of polysilicon in Q2/2019, while repeating full year guidance of polysilicon production of 37,000 MT to 40,000 MT
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Running its polysilicon production facilities at full capacity in Q1/2019, Daqo New Energy exceeded its polysilicon production volume guidance for the quarter with a total of 8,764 metric tons (MT), improving 55% over a year back. It sold 8,450 MT during the reporting quarter which is 56% more than it sold a year back. Yet, its YoY revenues slumped 15% during the period, even as these improved by over 7% sequentially.
The unaudited financial results for the quarter show EBITDA from continuing operations was $20 million compared to $48.6 million in Q1/2018, and EBITDA margin dropped to 24.6% from 50.8% a year back. Net income for the company was $6.6 million during Q1/2019, down 79% over previous year.
In March 2019, Daqo reported close to a 59% drop in its 2018 net income (see Daqo Does Well Sequentially In Q4/2018).
The good thing though was that Daqo managed to bring down its average total production cost of polysilicon to $7.42 per kg in Q1/2019 and average cash cost of $6.20 per kg at its Xinjiang polysilicon facilities. These were its lowest ever, the management said.
Production expansion on track
Manufacturing capacity expansion plans remain on track – till December 2018 it was producing 30,000 MT of polysilicon, which is expected to increase to 35,000 MT by June 2019. Currently it is undertaking a capacity debottlenecking project to upgrade older CVD furnaces with improved technology to increase production.
“The ramp-up process of this debottlenecking project will temporarily impact production volumes and cost and as a result we expect to produce approximately 7,200 to 7,400 MT of polysilicon at total production cost of $8.0 to $8.5 per kg during the second quarter of 2019,” said CEO Longgen Zhang. “Once our facilities are fully ramped up in June, we anticipate our total annual production capacity will reach 35,000 MT and our production costs will return to the current level of approximately $7.5 per kg.”
Under Phase 4A, the company aims to reach 70,000 MT capacity for which equipment installation has begun. As planned, it expects to have 70,000 MT of capacity in Q1/2020.
In Q2/2019 the company will aim to sell 7,100 MT to 7,300 MT of polysilicon. Overall for the entire 2019, Daqo has guided for annual production volume of 37,000 MT to 40,000 MT.
Speaking about Chinese solar market, for H2/2019 Daqo anticipates Chinese domestic solar PV market to significantly improve the overall supply-demand situation specially for tightly-supplied mono-grade polysilicon.