Wacker feels the brunt of the polysilicon market downturn

The EBITDA margin of Wacker’s polysilicon division has become razor-thin: In the third quarter of 2018, the ratio slumped to just 2.5%, down from 16.2% in the previous quarter and 24.9% in the prior year period.

“This marked decline was due mainly to substantially reduced volumes and lower average prices for polysilicon,” the major manufacturer said in its quarterly report. Beside that, ramp-up costs for its U.S. polysilicon plant near Charleston, Tennessee dampened the result. The factory was shut down for eight months after an explosion occurred at a hydrogen compressor in September 2017.

Due to the high depreciation for its new U.S. plant, the EBIT margin of Wacker’s polysilicon division has been negative since the first quarter of 2016. In the third quarter of 2018, it plummeted to -45.4%, down from -17.9% in the previous quarter.

Nevertheless, Wacker ran its two German polysilicon plants at full capacity to rebuild inventories at its Asian hubs, “which will allow it to supply customers promptly once demand and prices have picked up,” the company says.