OCI and Wacker feel weak demand due to US anti-dumping case

The uncertainty around the U.S. anti-dumping investigation against solar modules imported from Southeast Asia has left its mark on the third-quarter results of OCI Malaysia and Wacker. Both non-Chinese polysilicon manufacturers reported significantly lower earnings before interest, taxes, depreciation and amortization (EBITDA), whereas their Chinese competitor Daqo New Energy reduced its loss after it recorded a massive impairment in the second quarter.

• OCI Malaysia saw its revenues and operating income plummet by 63.0% and 89.8%, respectively, in the third quarter. We estimate that the company’s EBITDA margin dropped from 38% in the second quarter to approx. 27% in the third. The utilization rate of its polysilicon plant fell from more than 90% in the previous quarter to less than 70% – “due to early shut-down maintenance,” parent OCI Holdings explains in its results presentation. The major accident that occurred at the factory in Malaysia on August 14 is not mentioned with a single word.
  Sales volumes already began to decline in June after customers in Southeast Asia cut production in reaction to the U.S. anti-dumping investigation against solar modules imported from Cambodia, Malaysia, Thailand and Vietnam. OCI is planning to resume normal operations in mid-December and expects an average utilization rate of 50% for the second half of 2024.
• Wacker again displayed an earnings trend similar to that of OCI: The EBITDA margin of its polysilicon division fell from 23.8% in the second quarter to 14.0% in the third – almost the same level it achieved in the first quarter. In comparison to OCI, however, sales declined far less heavily by 9.9%. Nevertheless, the polysilicon division responded to the demand weakness due to the U.S. anti-dumping issue by introducing short-time work at its two German factories in Burghausen (Bavaria) and Nünchritz (Saxony) in early October, which will lower the utilization rate to 66% in the fourth quarter.
• Daqo New Energy reduced its negative EBITDA margin from -65.9% in the second quarter, which was caused by a huge impairment, to -17.3% in the third. While China’s third largest polysilicon manufacturer was able to drive down its cash costs from US$5.39/kg in the previous quarter to $5.34/kg, its average selling price continued to drop from $5.12/kg by 8.4% to $4.69/kg and thus fell further below its cash costs.
  As Daqo had announced, its production volume slumped from 64,961 metric tons (MT) in the second quarter to 43,592 MT, whereas the sales volume declined only slightly from 43,082 MT to 42,101 MT. Nonetheless, the company produced 31,661 MT more than it sold in the first three quarters of 2024. In the fourth quarter, Daqo is planning to further cut its output to a range of 31,000 MT to 34,000 MT; based on an effective annual production capacity of 350,000 MT, this volume corresponds to a utilization rate of only 35% to 39%.
• REC Silicon reduced its quarterly startup costs for its fluidized bed reactor (FBR) plant in Moses Lake in the U.S. state of Washington only slightly from US$37.9 million in the second quarter to $37.3 million in the third. Due to weak performance of its Semiconductor Materials segment in Butte, Montana, the company’s negative EBITDA margin fell from -101.3% in the second quarter to another record low of -126.4%.
  The EBITDA contribution of the Semiconductor Materials segment slumped from $7.0 million in the previous quarter to $0.4 million. The strong decrease was mainly due to a drop in shipment volumes of silicon gases by 21.3% from 654 MT to 515 MT, a scheduled maintenance shutdown, and the phase-out of the electronic-grade polysilicon business in Butte.
  At the solar-grade FBR plant in Moses Lake, the start of shipments was again delayed because granular polysilicon sent to a testing lab for qualification was held up by customs. As a consequence, REC Silicon has reduced the utilization rate of the FBRs in Moses Lake to 15% and has entered into a short-term bridge loan of $25 million with Hanwha International LLC, a subsidiary of the company’s two largest shareholders, Hanwha Solutions and Hanwha Corporation. The loan will be mature on February 4, 2025.