Weak demand still weighed on polysilicon makers’ results in Q2

For different reasons, weak demand affected the earnings before interest, taxes, depreciation and amortization (EBITDA) of both Chinese and non-Chinese polysilicon manufacturers in the second quarter. While Daqo New Energy recovered from its devastating first-quarter result only on the surface, Germany-based Wacker struggled with the market uncertainty in the US. By contrast, OCI TerraSus in Malaysia holds an optimistic market view as it has announced a doubling of its production capacity by 2029.

• Daqo New Energy reduced the heavy loss it had made in the first quarter. After it stopped selling polysilicon in February because the market price fell below its production costs, the company resumed sales in June; the volume increased from 4,482 metric tons (MT) in the first quarter by 239% to 15,190 MT in the second.
  However, Daqo’s average selling price of US$4.04/kg dropped even more below its unchanged production costs of $5.95/kg (cash costs of $4.57/kg plus depreciation of $1.38/kg).
  The company’s output of 43,675 MT – a slight increase of 0.6% over the previous quarter – remained far above its sales volume. Consequently, its inventories swelled by 67,405 MT in the first half of 2026.
  Due to the higher sales volume, Daqo’s EBITDA margin recovered from negative 311.1% in the first quarter to negative 46.8%. The company’s cash balance, short-term investments and bank deposits at the end of June amounted to $1.92 billion, compared to $3.2 billion at the end of 2023.
  Supported by rising prices after the intervention of China’s market regulator on July 31, Daqo is planning an output of 40,000 MT to 45,000 MT in the third quarter, basically unchanged from the previous two quarters. The production target for the full year is 160,000 MT to 180,000 MT.
• OCI TerraSus (formerly OCI Malaysia) improved its result significantly after its 35,000 MT plant returned from regular maintenance to a utilization rate of 90% in the second quarter.
  The operating loss was reduced from KRW26.6 billion (US$18 million) in the first quarter to KRW3.5 billion (US$2.3 million). Although uncertainty about potential import duties under Section 232 of the US Trade Expansion Act prevailed among customers, the revenues of OCI TerraSus increased from KRW100.9 billion (US$68.6 million) in the first quarter by 8.3% to KRW109.3 billion (US$72.8 million). The company’s polysilicon EBITDA margin became positive again; we estimate it at about 9%.
  OCI announced that it would double the production capacity of its Malaysian polysilicon plant from currently 35,000 MT to 70,000 MT by 2029; construction would begin in the second half of 2026. The company’s previous plan foresaw an expansion to 56,600 MT by 2027, but growing demand for solar electricity driven by data centers in the US and a new long-term sales contract with a US customer (presumably SpaceX or Tesla) have prompted OCI to adjust its strategy.
  The company’s new Vietnamese wafer subsidiary NeoSilicon Technologies, which started production in June, is also planning to increase its capacity from 2.7 GW to 11.5 GW in 2029.
• Wacker suffered more from the uncertainty around the US Section 232 investigation. After the EBITDA margin of its polysilicon division was hovering around 10% between the first quarter of 2025 and the first quarter of 2026, it dropped to 5.0% in the second quarter.
  Running at a low utilization rate at all three plants in Charleston (USA), Nünchritz and Burghausen (Germany), the division was able to reduce its solar-grade polysilicon inventories by 20% compared to one year ago. As fixed costs that get buried in inventory are recognized when this inventory is sold, however, the depletion has a negative impact on the financial result.
  Moreover, solar-grade polysilicon prices declined during the quarter, and the division received less CO₂ electricity price compensation than last year. These negative factors were partly compensated by the effect of the company’s cost saving program and strong sales volumes of electronic-grade polysilicon for the semiconductor industry, which rose by 10% in the first half of 2026.
  Wacker’s CEO Christian Hartel made it clear that all would depend on the outcome of the US Section 232 investigation and customer reactions whether the company would still see a business case for solar-grade polysilicon or shut down one of its three polysilicon plants. Perhaps, Wacker will announce a decision at its Capital Markets Day in London on September 17.