EBITDA lead of polysilicon maker Daqo shrank in second quarter

Polysilicon EBITDA margins of Daqo, OCI, Wacker and REC Silicon from Q2 2018 through Q2 2019
The EBITDA lead of China-based polysilicon maker Daqo over non-Chinese manufacturers is narrowing – Chart: Bernreuter Research

Daqo New Energy, one of the leading low-cost polysilicon manufacturers in China, recorded significantly lower earnings in the second quarter (Q2) of 2019. EBITDA almost halved from $20 million in Q1 to $10.2 million in Q2; the EBITDA margin fell from 24.6% to 15.5%.

About one third of the decline was due to a lower average selling price of polysilicon, which slipped from $9.55/kg in Q1 to $9.10/kg in Q2. The other two thirds were caused by a 5,000 metric ton (MT) debottlenecking project and annual maintenance works, which weighed on production volume (down from 8,764 MT in Q1 to 7,151 MT in Q2) and sales (down from 8,450 MT to 7,130 MT) as well as cash production costs (up from $6.20/kg to $6.65/kg).

Planning to increase the share of monocrystalline grade in its sales from 80% in Q2 to 85% of 9,000 to 9,300 MT in Q3, Daqo appears prepared for the massive uptick of demand in China expected to start in September. The company anticipates the price of mono-grade polysilicon to rise to a range of $10.50 to $11 per kg – a level that Bernreuter Research already predicted in its newsletter issued in December 2018.

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