2021 Profit Alert For Daqo New Energy

• Daqo New Energy's subsidiary Xinjiang Daqo New Energy expects its net profit for 2021 to increase to RMB 5.6 billion to RMB 5.8 billion
• It would be an improvement of between 437% to 456% over RMB 1.043 billion it reported for 2020
• High polysilicon prices due to its short supply is the primary reason for this expected increase, according to the management

Chinese polysilicon producer Daqo New Energy expects to report a net profit of between RMB 5.6 billion to RMB 5.8 billion ($885 million to $917 million) in 2021, reflecting an annual increase of 437% to 456%, attributing it to high prices for polysilicon in the global market due to short supply.

In a stock exchange filing announcing preliminary financials, the management said its principal operating subsidiary Xinjiang Daqo New Energy expects to grow its net profit for 2021 by RMB 4.55 billion to RMB 4.75 billion ($720 million to $751 million), compared to RMB 1.043 billion it reported for the year 2020.

Management attributes the anticipated increase to the growing demand for high-purity polysilicon materials in the last year amidst its short supply that pushed up the prices. Daqo was able to run its production facilities at full capacity and says both production and sales were higher in 2021 compared to the previous year. The audited financial report will be published at a later date.

Earlier, Daqo saw its Q2/2021 revenues growing by over 230% due to higher average selling price (ASP) and tight supply (see Daqo New Energy Reports 'Excellent' Quarter In Q2/2021).

Polysilicon prices have been on an upward swing with Rystad Energy noting almost a 300% increase in H2/2021 compared to 2020 that pushed manufacturing costs further up (see High Prices May Thwart 50 GW Solar PV In 2022).

Market intelligence firm PV InfoLink points out that polysilicon prices have been on a downward spiral since December 2021 as buyers adopted a wait and watch policy, leading to polysilicon inventories piling up. As new polysilicon capacity comes online in H1/2022, its price can also be expected to stabilize the prices. However, by mid January silicon prices had stabilized and were again slightly on the rise.

"With a lower standard price for 2022, polysilicon manufacturers have no choice but revise down prices based on the price level at the end of the year. Prices are expected to fall rapidly in mid-2022, when more polysilicon lines come online," stated PV InfoLink in December 2021.