Daqo New Energy narrows Q2 losses, resumes sales below cost

However, its improvements from Q1 may not be reflective of much, as its results for the first quarter of the year were remarkable. Comparisons with Q2 2025 actually show a slight decline in performance, with revenues dropping from US$75.2 million, losses rising slightly from US$81.4 million and margin declining from -108%.

Daqo’s polysilicon sales in Q2 were 15,190MT, a marked increase from 4,482 MT in Q1 2026 and down from 18,126MT in the equivalent period 2025. This quarterly change is because the company resumed selling polysilicon below the cost of production in June, a practice which it refrained from doing in Q1. This decision saw its Q1 sales fall by over 88%.

The average cost of production in Q2 was US$5.95/kg—the same as Q1—but Daqo’s average selling price dropped to US$4.04/kg.

“With polysilicon market prices remaining below production costs since the first quarter of 2026, we initially refrained from engaging in below-cost sales in line with Chinese self-regulation guidelines, and adopted a disciplined, wait-and-see approach pending further implementation of the national anti-involution policies,” said Xiang Xu, CEO of Daqo New Energy. “However, after an extended period without clear policy updates, we adjusted our sales and pricing strategies toward a more market-oriented approach in June.”

He added: “In the second quarter of 2026, market sentiment across the solar PV industry remained cautious amid weak domestic demand and elevated inventory levels, which drove prices lower across the solar value chain.”

These same dynamics have defined the polysilicon market for over a year, and Daqo has been posting annual losses for the last two years. Despite this, the company—and the polysilicon industry at large—continues to maintain its production levels, which are far in excess of sales. Daqo’s Q2 polysilicon production was 43,675MT, consistent with the 43,402 MT it produced in Q1. Of this almost 90,000MT, under 20,000MT have been sold.

Earlier this month, Daqo joined fellow polysilicon firms including Tongwei, GCL and Xinte in signing a pledge to curb below-cost sales and self-regulate pricing. The measures will reportedly include phasing out outdated capacity, conserving energy and reducing carbon emissions, alongside the headline aim of regulating prices. Since then, PV Tech has reported that the Chinese polysilicon market has been stagnant, with no transactions taking place in the week immediately after the pledge was announced. There have been similar efforts to regulate industry practices before, with limited lasting results.

Earlier this year, following Daqo’s remarkable 88% sales drop in Q1, polysilicon market expert Johannes Bernreuter told PV Tech Premium that the current situation in China’s poly industry is “irrational”. He assessed that leading polysilicon players seem willing to accept losses and increasing inventories in order not to change their operational conditions, hence the continued production levels despite falling sales.

He also said that the previous efforts to regulate prices “obviously” hadn’t worked as the fact of massive oversupply continues to depress prices. Reacting to the industry’s recent pledge on LinkedIn, he wrote: “the enforced price increase may well raise supply and shrink demand at the same time. By treating the symptoms – record-low prices – the Chinese government exacerbates the root cause – namely oversupply.”