Stocks: RECO

REC Silicon stopping all FBR polysilicon production at Moses Lake plant

REC Silicon said in a trading update ahead of releasing fourth quarter results at the end of the week that it would shutdown its Silane IV production unit and remaining FBR production at its Moses Lake plant.

US-based polysilicon producer REC Silicon said in a trading update ahead of releasing fourth quarter results at the end of the week that it would shutdown its Silane IV production unit and remaining FBR production at its Moses Lake plant.

In July, 2015, REC Silicon said it would cut its fluidised bed reactor (FBR) production 2,000MT and stop planned expansions at the Moses Lake facility. China had imposed import duties of 57% on REC Silicon in retaliation to US anti-dumping duties, sparking a trade war between the countries.

Falling polysilicon spot prices due to overcapacity not weak market demand has technically excluded REC Silicon from selling its polysilicon into the Chinese market. 

Hemlock Semiconductor, one of the largest polysilicon producers and also based in the US is also impacted by heavy import duties and halted construction of a major new production plant.

Dow Corning said last week that Hemlocks polysilicon sales continued to decrease in the fourth quarter, noting that customers taking product under long-term contracts reduced, resulting in fewer shipments.

In the trading update, REC Silicon noted that it expected to shutdown the Moses Lake plant in February, undertake preventative maintenance, retaining employees and potentially restart production in June, 2016. 

The company is also revising previous plans to restart Silane III production in January, 2016. Excess inventories dictate that the plant will remain closed until a resolution to Chinese import duties is achieved. 

Financial results

REC Silicon sad that fourth quarter 2015 polysilicon sales volumes were 2,740 MT, compared to guidance of 4,855 MT, and finished goods inventory decreased by 131 MT, compared to guidance of 1,700 MT of inventory depletion. 

Solar grade polysilicon ASPs were said to have declined by 4% compared to the previous quarter.

The company reported fourth quarter 2015 revenue of US$74.9 million, compared to US$87.5 million in the previous quarter. EBITDA loss was US$29.6 million, compared to US14.1 million for the previous quarter.

REC Silicon will also recognize an impairment of US$151.5 million, due to expected lower future polysilicon prices. 

PV Tech recently reported that polysilicon spot prices had dropped to record low levels, making it difficult for many smaller producers to sell below cash cost.

REC Silicon said that it expected first quarter 2016 FBR solar grade polysilicon production to be only around 820MT, semiconductor production is expected to be 450MT, and total polysilicon production is expected to be 1,540MT, sales will also be inline with fourth quarter levels, according to the company.

Tags: polysilicon

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