Daqo New Energy reported a net loss of $60.7 million in Q3 2024 as its revenues declined by over 9% QoQ
ASPs were significantly below production costs across the value chain, according to the management
It has lowered the annual production guidance to now 200,000 MT to 210,000 MT
Leading Chinese polysilicon producer Daqo New Energy sustained a net loss of $60.7 million in Q3 2024, which is an improvement from the $119.8 million it reported for the previous quarter. The company blames it on ASPs below production costs for the industry across the value chain.
As compared to its average total production cost of $6.61/kg in the reporting quarter, polysilicon ASP was $4.69/kg, down from $5.12/kg in Q2 2024 (see Daqo Blames Low Polysilicon ASPs For Q2 2024 Negative EBITDA).
Lower ASPs and lower shipment volumes (42,101 MT) pulled down its Q3 revenues sequentially from $219.9 million to $198.5 million. In comparison, its revenues totaled $484.8 million during Q3 2023 (see Polysilicon Price Dynamics Impact Daqo’s Q3/2023 Results).
Weak market demand and the need to reduce its cash burn prompted the management to lower its utilization rate to 50%.
The total production volume at its 2 polysilicon facilities for the quarter was 43,592 MT, compared to 64,961 MT in the previous quarter. The overall n-type product mix reached 75%, shared the company, as it now eyes 100% n-type by the end of 2025.
Daqo CEO Xiang Xu said, “Despite lower utilization levels, we further reduced our cash cost to $5.34/kg, compared to $5.39/kg in the second quarter. However, unit production cost trended up 7% sequentially to an average of $6.61/kg, as a result of reduced production level which led to facility idle cost of approximately $0.55/kg.”
Xu shared that challenging market conditions forced more industry players to reduce production utilization rates, leading to polysilicon supply decreasing in China by 15% and 6% month-over-month (MoM) in July and August, respectively.
China’s total production volume dropped to below 130,000 MT in August, its ‘lowest year-to-date’ with prices bottoming in the range of approximately RMB 35 to RMB 40/kg and rebounding to around RMB 38 to RMB 43/kg in August and September.
“In the medium to long-term, we believe the current low prices and market downturn will eventually result in a healthier market, as poor profitability, losses, and cash burn will lead to many industry players exiting the business, ultimately eliminating overcapacity and bringing the solar PV industry back to normal profitability and better margins,” added Xu.
The management called the China Photovoltaic Industry Association’s (CPIA) recommendation to set a reference price of RMB 0.68 ($0.956)/W for modules as the floor for winning bids as a positive for the industry as it aims to put an end to below-cost module sales (see China Solar PV News Snippets: GCL-SI & AESOLAR At TaiyangNews Virtual Conference & More).
Philip Shen of ROTH MKM believes the Chinese government’s efforts to establish supply-side controls to limit polysilicon production for the industry, expected to be brought into force before year-end, are a positive for Daqo as well as for the PV industry.
Going forward, Daqo targets to produce close to 31,000 MT to 34,000 MT of polysilicon during Q4 2024. It has now further revised its annual production guidance downward to 200,000 MT to 210,000 MT, including its annual facility maintenance, from last quarter’s guided range of 210,000 MT to 220,000 MT.