Polysilicon producer Daqo breaks the cash cost barrier of $6/kg

Polysilicon EBITDA margins of Daqo, OCI, REC Silicon and Wacker from Q3 2018 through Q3 2019
Apart from Q2 2019, Daqo’s EBITDA margin has steadily been above 20%, thanks to a low electricity rate – Chart: Bernreuter Research

After weaker results in the second quarter (Q2) due to debottlenecking and maintenance, Daqo New Energy has returned to record figures. The China-based polysilicon manufacturer achieved so far unthinkable cash production costs of US$5.85/kg in the third quarter.

 Production output increased from 7,151 metric tons (MT) in Q2 to 9,437 MT and the sales volume from 7,130 MT to 9,238 MT. As Daqo’s average selling price declined only slightly by 1.2% from $9.10/kg in Q2 to $8.99/kg, the company’s EBITDA margin recovered from 15.5% in Q2 to 23.5% – only little below the value of 24.6% it reached in Q1 (see chart).

Once Daqo’s capacity expansion from 40,000 MT to around 80,000 MT is fully running by the end of the year, the company expects production costs of $6.50/kg, including higher depreciation for the new facilities, compared to $6.97/kg in Q3. Consequently, cash costs will approach $5/kg.

Daqo predicts that most of the 22.8 GW of subsidized PV projects in China originally planned to be installed in the fourth quarter of 2019 will be delayed to the first half of next year. The company believes that global PV demand in 2020 could exceed 140 GW.

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