OCI hurt by low prices, enters semiconductor polysilicon business

Although South Korean chemicals group OCI benefited from high demand for monocrystalline-grade polysilicon and increased its polysilicon sales volume by 24% in the fourth quarter (Q4) of 2018, its basic chemical division, which includes polysilicon, was in red territory for the second quarter in a row.

The division recorded an EBITDA margin of minus 2.7%, after minus 2.0% in Q3 2018. Main contributors were the decline of the polysilicon price by 12% quarter over quarter, lower sales volume of other basic chemicals due to a downturn in the semiconductor industry, and an inventory valuation loss of KRW8.4 billion (US$7.5 million).

Because of a small gas leakage in November, OCI had to shut down its P3.7 polysilicon plant until late January and lost 6% of polysilicon output in Q4. Regular maintenance will reduce the utilization rate to between 85% and 90% in Q1 2019. The capacity expansion of OCI’s polysilicon plant in Malaysia by 10,000 metric tons (MT) is scheduled to be completed by the end of Q1.

The company announced that it will enter the higher-margin polysilicon business for semiconductors. It is targeting an annual output of 4,000 to 5,000 MT in this segment.