- Daqo’s Q3/2021 revenues grew 366% YoY and 32% QoQ to $585.8 million
- It attributes growth in financials to high ASP of polysilicon that ranged at $27.55 per kg
- High price of silicon powder increased its average production cost by 8.4% QoQ, barring which its production cost had declined 1%, according to the management
- The company is expanding its production capacity and is on the lookout for a suitable location
With more than 30% sequential increase in the average selling price (ASP) of polysilicon in Q3/2021 at $27.55 per kg, Chinese polysilicon maker Daqo New Energy reported a strong quarter with ‘record-high’ production volume of 21,684 per metric ton (MT). Its gross profit during the quarter was $435.2 million, compared to $45.3 million a year back.
“The end market demand continues to be strong even under today’s high-price module environment, and this has further raised polysilicon market prices to the current level of $33-$35/kg,” shared Daqo CEO Longgen Zhang.
Barring the high price of silicon powder that increased the company’s average production cost by 8.4% QoQ in Q3/2021 to $6.84 per kg from $6.31 per kg in Q2/2021, Zhang said Daqo’s total production cost decreased by around 1% over the same period (see Daqo New Energy Reports ‘Excellent’ Quarter In Q2/2021). According to Daqo, thanks to the strong market demand, it has been able to pass down the majority of such cost increase to its customers.
He admitted increase in silicon powder cost to be a factor that will continue to impact the company’s cost structure in Q4/2021 even though the prices are stabilizing. He sees these prices normalizing in H1/2022 as new supply floods the market and energy and emission controls are relaxed in China. Currently, dealing with coal shortage, the country is imposing major power cuts to bring down its carbon emissions.
Another challenge he sees in the near future is related to strict energy quota and carbon emission control in China since renewable energy use will not be counted towards energy usage quote under the country’s new policies. This may slowdown the overall expansion pace of polysilicon industry.
Daqo sold 21,183 MT in the 3rd quarter, bringing in $585.8 million revenues, reflecting an increase of over 366% YoY, and 32% QoQ. Gross margin swelled to 74.3% from 36% YoY and 68.7% QoQ.
With its production facilities fully utilized, between January 2021 and September 2021, Daqo produced 62,970 MT of polysilicon and sold close to 63,714 MT.
The Chinese company remains on track with regard to the construction of its Phase 4B capacity expansion project with 35,000 MT. Construction on site in Xinjiang is set to complete by the end of 2021 and fab fully ramped up by the end of Q1/2022. It is also in the process of identifying the location for its next expansion project where it will produce green polysilicon, as management continues to foresee demand for solar growing in the future, while referring to Chinese government’s 400 GW wind and solar park plan out of which construction on the initial 100 MW capacity is currently on in deserts of China.
It continues to reiterate annual production volume of around 83,000 MT to 85,000 MT in 2021.