Polysilicon maker OCI plunges into red after halting production

The continuing uncertainty about the solar market in the United States severely impacted the earnings before interest, taxes, depreciation and amortization (EBITDA) of Malaysian polysilicon manufacturer OCI TerraSus in the second quarter. Wacker also felt the weak demand for non-Chinese polysilicon, but the German competitor benefitted from strongly increasing sales of electronic-grade polysilicon to the semiconductor industry. Chinese producer Daqo New Energy again suffered from the ultra-low price level on the domestic market.

• OCI TerraSus (formerly OCI Malaysia) plunged deep into the red in the second quarter. The company suspended production in May in reaction to weak demand caused by the uncertainty about the development of the PV market in the United States, the main destination of solar modules made of non-Chinese polysilicon. Moreover, in June U.S. customs detained solar cells from Hanwha’s South Korean factory in Jincheon under the Uyghur Forced Labor Prevention Act; Hnwha has a large polysilicon supply contract with OCI TerraSus.
  As a result, sales of OCI TerraSus dropped from KRW112.5 billion (US$77.1 million) in the first quarter by 65.7% to KRW38.6 billion (US$27.6 million). The operating income deteriorated even more: It turned from KRW12 billion (US$8.26 million) in the first quarter into a heavy loss of KRW74 billion (US$52.9 million). Besides the sales slump, the recognition of inventory valuation losses weighed on the result. We estimate that the company’s EBITDA margin plummeted from +20% in the previous quarter to approx. -163%.
  At the presentation of the second-quarter results on July 24, OCI Holdings said that its subsidiary TerraSus had “constructive discussions” with customers and expected to resume operations in the third quarter “in line with market conditions.”
• Wacker fared significantly better in the second quarter: The EBITDA margin of its polysilicon division rose from 9.9% in the first quarter to 15.4%, thus returning to the level of the third quarter (14.0%) and fourth quarter of 2024 (17.1%, excluding the special effect from U.S. production tax credits), but remaining below the result in the second quarter of 2024 (23.8%).
  Like OCI, Wacker experienced a slump in the sales of solar-grade polysilicon due to the uncertainty on the U.S. market; consequently, the company lowered the utilization rate of its polysilicon plants further from the 50% announced in early 2025 to reduce inventories. However, the division’s result was saved by soaring sales volumes of electronic-grade polysilicon for the semiconductor industry after they were already significantly higher in the first quarter. A new etching line, which was inaugurated at Wacker’s site in Burghausen, Bavaria in July, will increase the production capacity for hyper-pure polysilicon by more than 50% in the coming years.
  For the full year 2025, the polysilicon division now expects sales at the prior-year level of EUR949 million and an EBITDA of about EUR100 million, which corresponds to an EBITDA margin of 10.5%.
• Daqo New Energy stabilized its EBITDA loss at -US$48.2 million as the company was able to drive down its cash costs through lower silicon metal costs and less energy consumption by $0.19/kg from $5.31/kg in the first quarter to $5.12/kg in the second. That was slightly more than the decline of its average selling price by $0.18/kg from $4.37/kg in the previous quarter to $4.19/kg.
  However, Daqo’s sales volume slumped from 28,008 metric tons (MT) in the first quarter by 35% to 18,106 MT, whereas its output rose from 24,810 MT to 26,012 MT so that the inventory increased by 7,906 MT. As a result, the company’s negative EBITDA margin dropped from -39.1% in the first quarter to -64.0% in the second. Daqo’s cash reserves, short-term investments and bank deposits decreased from US$2.15 billion at the end of March to US$2.06 billion at the end of June.
  In the third quarter, the company is planning to produce 27,000 MT to 30,000 MT and to become cash positive again after the Chinese government has instructed the PV industry not to sell below production costs.