Overcapacity and falling polysilicon prices slashed Daqo’s Q1 2025 revenues and led to continued net losses
Despite lower capacity utilization rates, management believes there still exists overcapacity in the market that will continue to put pressure on prices
It touts a strong cash position and zero debt, which make it resilient in the face of expected consolidation in the market
The ongoing issue of overcapacity and falling prices in the solar PV sector continues to pressure manufacturers, as these factors contributed to a decline in Q1 2025 revenue for Chinese solar-grade polysilicon producer Daqo New Energy.
The average selling price (ASP) for polysilicon during the reporting quarter was $4.37/kg compared to $4.62/kg last quarter. It is lower than the company’s average total production cost of $7.57/kg, which went up from $6.81/kg in Q4 2024.
Owing to this price challenge, Daqo registered a net loss of $71.8 million vis-à-vis a net income of $15.5 million reported for Q1 of last year. Nevertheless, it managed to narrow down its loss from the $180.2 million net loss incurred in the previous quarter (see Daqo New Energy’s FY2024 Revenues Declined By 56% YoY).
The company’s revenues of $123.9 million during the quarter were lower than the $195.4 million it reported in the previous quarter and $415.3 million in Q1 2024 (see Daqo New Energy’s Q1 2024 Net Income Narrows Down).
The manufacturer reduced its utilization rate to approximately 33% of its nameplate capacity in response to the challenging market conditions and weak selling prices. Together, its 2 factories produced 24,810 metric tons (MT) of polysilicon during the initial 3 months of 2025, thus not meeting up to 28,000 MT, the high-end of its guidance. Thanks to existing inventory, it managed to sell 28,008 MT, exceeding production. It did incur approximately $1.58/kg of idle facility related costs for the quarter.
While there is a flurry of activity before China implements market-oriented reform policy on June 1, 2025, Daqo CEO Xiang Xu said there has been an increase in market prices of solar products, but this improvement is yet to fully materialize in the polysilicon segment.
During Q1 2025, thanks to the self-discipline measures implemented by polysilicon producers ‘to mitigate the impact of irrational competition amid falling prices,’ there was an industry-wide capacity utilization of approximately 50%. Yet, there remains a high inventory of polysilicon with ingot/wafer manufacturers, according to ROTH.
Philip Shen, ROTH’s Managing Director and Sr. Research Analyst, believes, “We believe it may take all of 2025 to get through this inventory, which leaves a challenging pricing outlook for the year.”
Shen does see several Daqo competitors exiting the market within 12-18 months as they find it tough to continue to operate uneconomically. Daqo, he added, is the ‘best positioned poly producer to weather the storm with ~$2.1bn in cash ($32/ share), no debt, and only ~$100mn of expected cash burn in 2025.’
Xu echoes the sentiment as he believes the current low prices and market downturn will eventually result in a ‘healthier and more sustainable industry.’
“As ongoing losses, poor profitability, and cash burn force less competitive players to exit the market, we expect overcapacity to be ultimately eliminated, bringing the solar PV industry back to normal improved profitability and healthier margins,” added Xu.
Daqo projects 25,000 MT to 28,000 MT of polysilicon supply during Q2 2025. It reiterates annual production guidance of 110,000 MT and 140,000 MT for 2025. Its total nameplate annual production capacity stands at 305,000 MT.
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