Daqo achieves cash costs of $5/kg on record polysilicon output

Polysilicon EBITDA margins of Daqo, OCI, REC Silicon and Wacker from Q1 2019 through Q1 2020
With an EBITDA margin of 37.4%, Daqo is far ahead of its non-Chinese competitors OCI, REC and Wacker – Chart: Bernreuter Research

Defying Covid-19-related constraints in raw material supply and shipment logistics, China-based polysilicon manufacturer Daqo New Energy achieved record production and sales volumes of 19,777 metric tons (MT) and 19,101 MT, respectively, in the first quarter.

The volumes confirm earlier estimates of an effective production capacity of 80,000 MT after the ramp-up of Phase 4A in the fourth quarter of 2019. Benefitting from economies of scale, Daqo reduced its cash production costs faster than anticipated from US$5.47/kg in Q4 to $5.01/kg. Manufacturing costs including depreciation also decreased significantly from $6.38/kg to $5.86/kg.

The share of monocrystalline wafer customers in shipments grew from 89% in Q4 to 95%. Thus, Daqo was able to increase its average selling price slightly from $8.77/kg in Q4 to $8.79/kg. As a result, operating EBITDA (without one-off effects) further rose from 33.8% to 37.4%.

Due to the demand drop in the wake of the Covid-19 pandemic, Daqo has started annual maintenance ahead of schedule in the second quarter. CEO Longgen Zhang expects the price for mono-grade polysilicon to return to a range of $8.50 to $9 per kg in Q4 2020.

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