Asian polysilicon producers outperform western competition

Polysilicon EBITDA margins of Daqo, Wacker, OCI and REC Silicon from Q3 2021 through Q3 2022
Without share incentive costs, Daqo’s EBITDA margin would have reached 80.6% in the third quarter – Chart: Bernreuter Research

Chinese polysilicon manufacturer Daqo and OCI’s polysilicon subsidiary in Malaysia improved their operational performance in the third quarter, whereas high energy costs still impacted the earnings before interest, taxes, depreciation and amortization (EBITDA) of western competitors Wacker and REC Silicon:

  • Daqo New Energy recorded an EBITDA margin of 59.0% in the third quarter. Although this value was significantly lower than the result of 76.8% in the previous quarter, it was not due to operational weakness, but to $263.4 million in non-cash share-based compensation costs resulting from the company’s 2022 share incentive plan for key employees, which inflated the selling, general and administrative expenses in the quarter. Without this special item, the EBITDA margin would have reached 80.6%. The gross margin increased from 76.1% to 80.2%. Daqo was able to drive down its cash production costs (excluding depreciation) from $6.51/kg to $6.06/kg.
  • OCI continued to improve the EBITDA margin of its basic chemicals division from 32.3% to 43.4%. It benefitted from the strongly increasing utilization rate of its solar-grade polysilicon plant in Malaysia after debottlenecking the capacity from 30,000 to 35,000 metric tons was completed at the start of the quarter. Consequently, polysilicon production and sales volumes increased by 30% and 36%, respectively. Regarding the planned major expansion in Malaysia, OCI is still in discussions with the government and the power supplier.
  • Wacker was impacted by the exploding prices for natural gas and electricity in Europe even more strongly than in the previous quarter. The EBITDA margin of the company’s polysilicon division further declined from 37.6% to 30.8%. Concluding from Wacker’s annual guidance, however, we expect the polysilicon EBITDA margin to return to approximately 45% in the fourth quarter as the spot prices for natural gas and electricity have considerably fallen in the meantime.
  • REC Silicon was hit by a triple whammy of larger-than-usual planned maintenance shutdown, record-high energy costs and shipment deferrals in the third quarter. Sales volumes of polysilicon and silicon gases from the plant in Butte, Montana (USA) fell by 17% and 31%, respectively. As a result, REC Silicon’s EBITDA margin plummeted from -2.4% in the second quarter to -37.7%. The target for restarting the company’s solar-grade granular polysilicon plant in Moses Lake, Washington remains unchanged in the fourth quarter of 2023. Negotiations about an off-take agreement with Hanwha, REC Silicon’s new and largest shareholder, are still ongoing.

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