Daqo increases its lead with polysilicon EBITDA margin of 77%

Polysilicon EBITDA margins of Daqo, Wacker, OCI and REC Silicon from Q2 2021 through Q2 2022
Supported by low costs, Daqo increases the distance between its EBITDA margin and those of competitors – Chart: Bernreuter Research

Chinese polysilicon manufacturer Daqo benefited from falling silicon metal prices in the second quarter, whereas high energy costs weighed on the earnings before interest, taxes, depreciation and amortization (EBITDA) of western competitors Wacker and REC Silicon:

  • Daqo New Energy reported a record EBITDA margin of 76.8%, significantly up from the result of 64.6% in the first quarter. Daqo benefited both from lower silicon metal costs, which fell by 37% compared to the previous quarter, and from economies of scale after the ramp-up of its new Phase 4B production facility. As a result, the company’s cash production costs (excluding depreciation) dropped from $9.19/kg to $6.51/kg.
  • OCI was also able to improve the EBITDA margin of its basic chemicals division from 26.2% to 32.3% although the utilization rate of the company’s solar-grade polysilicon plant in Malaysia was reduced to 70% due to unexpected maintenance. Like Daqo, however, OCI benefitted from the decline of silicon metal prices. After completion of its debottlenecking project, the Malaysian plant is now running with a production capacity of 35,000 metric tons. The official announcement of a future capacity expansion is still outstanding.
  • Wacker is increasingly feeling the effects of exploding prices for natural gas and electricity in Europe in the wake of Russia’s war against Ukraine. The EBITDA margin of the company’s polysilicon division further declined from 42.7% in the prior quarter to 37.6%. In contrast to Daqo and OCI, Wacker also reported somewhat higher silicon metal costs.
  • REC Silicon saw its EBITDA margin slide into red territory again, down from 10.3% in the first quarter to -2.4%. The main reason was a seasonally higher electricity rate for the company’s small electronic-grade polysilicon and silane plant in Butte, Montana (USA). That reduced the EBITDA margin of its semiconductor materials business from 31.0% in the previous quarter to 16.7% although the polysilicon sales volume rose by 76%. The lower EBITDA of the business unit was eaten up by overhead costs and first expenses for the restart of the company’s solar-grade granular polysilicon plant in Moses Lake, Washington in the fourth quarter of 2023. REC Silicon now puts the number of capital expenditure for the plant upgrade (fluidized bed reactors for mono-grade material, packaging equipment for larger bags, analytical lab) at US$150 million, which it is planning to fund through debt and/or new equity.

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