Increase of polysilicon EBITDA margins slowing at a high level

Polysilicon EBITDA margins of Daqo, Wacker, OCI and REC Silicon from Q3 2020 through Q3 2021
The EBITDA margins of Daqo, Wacker and OCI rose further in the third quarter, though at a slower pace – Chart: Bernreuter Research

A still higher average selling price further elevated the earnings before interest, taxes, depreciation and amortization (EBITDA) of polysilicon manufacturers in the third quarter. Compared to the sharp rise in the second quarter, however, the increase slowed down:

  • Daqo New Energy posted another record EBITDA margin of 75.4%, after 70.6% in the second quarter. The company’s 85,000-ton plant in the Xinjiang Uyghur Autonomous Region in northwestern China churned out 21,684 metric tons (MT), the highest quarterly volume achieved so far. Although cash costs were driven up by higher silicon metal powder costs from US$5.41/kg in the previous quarter to $5.96/kg, this was easily compensated by the increase of the average selling price from $20.81/kg to $27.55/kg. Daqo now has a total liquidity of $1.4 billion (cash and cash equivalents, short-term financial products and bank notes) to finance its planned expansion to 270,000 MT by the end of 2024. As it “becomes more and more challenging” to receive energy quotas for new production capacities in China, however, the company is looking for a location with more renewable energy supply.
  • Wacker increased the EBITDA margin of its polysilicon division by even seven percentage points, up from 42.1% to 49.1%. The Germany-based company continues to benefit from strong demand not only for solar-grade, but also for electronic-grade polysilicon from the semiconductor industry. In the conference call on Wacker’s third-quarter results, management indicated that it might announce a capacity expansion for electronic-grade polysilicon in March 2022.
  • OCI, however, lost some of its momentum. The EBITDA margin of the company’s basic chemicals division rose less strongly than Wacker’s figure, namely from 42.4% to 45.3%. Higher prices were partially offset by a 15% decline in polysilicon sales volumes compared to the second quarter when additional sales from inventories boosted OCI’s results. While its electronic-grade polysilicon plant in South Korea is running at a utilization rate of 50% due to scheduled maintenance in the fourth quarter, the solar-grade plant in Malaysia has postponed maintenance to the first quarter of 2022.
  • REC Silicon continued its negative trend as the operating EBITDA margin deteriorated from -1.4% in the previous quarter to -10.2%. The company’s small electronic-grade polysilicon and silane plant in Butte, Montana (USA) was still affected by maintenance after it was hit by a lightning strike in the second quarter. In addition, the restart was delayed in order to avoid paying increased electricity prices.

Both Daqo, Wacker and OCI explained that they have hedged against the recent price spike of silicon metal feedstock or have been able to pass it on to their customers. Hence, polysilicon EBITDA margins should remain at a very high level in the fourth quarter.

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