Major polysilicon provider Daqo New Energy has reported a rise in revenues as average selling prices (ASPs) inched upward in the opening quarter, however the firm’s ASPs could effectively double in Q2.
Reporting its first quarter results today, Daqo posted quarterly revenues of US$256.1 million, up 3% from the US$247.7 million reported in Q4 2020. ASPs for its solar-grade polysilicon edged up 10% sequentially, hitting US$11.90/kg in the quarter.
This resulted in a gross margin of 46.4% during the quarter, again a marginal gain on the 44.2% margin recorded in the previous quarter, with non-GAAP earnings amounting to US$128.1 million.
But the company expects a recent surge in polysilicon selling prices to be recognised in its forthcoming quarters, and Daqo chief executive Longgen Zhang said the company was now forecasting ASPs in Q2 2021 to be in the range of US$19 – 20/kg, a “significant improvement” compared to Q1 2021.
Polysilicon spot prices have continued to rise as demand far outstrips supply. Earlier this week PV Tech reported that average spot prices for monocrystalline grade polysilicon recorded in China last week rose again to RMB164 (US$25.40)/kg.
Zhang added that the strong end market demand for polysilicon is expected to maintain and supply will remain constrained until the middle of next year, when new capacity is set to come onstream. Zhang added that it has sold out of its polysilicon production volume for this year as a result of long-term supply agreements.
Daqo produced 20,185MT of polysilicon during the quarter and sales volume during the reporting period stood at 21,471MT, both figures down on the 21,008MT produced and 23,186MT sold in Q4 2020. Daqo is now raising its guidance for annual production slightly, up from 80,000 – 81,000MT to 81,000 – 83,000MT.
Having received prepayments of RMB800 million (US$124.5 million), Daqo is funnelling these proceeds towards future expansion plans. Construction on the company’s new Phase 4B project, which will add 35,000MT of polysilicon capacity, started in March and is set to complete by the end of this year before ramping in Q2 2022.
Zhang said the new capacity, coupled with a prospective initial public offering on China’s STAR Market, would bring the company into a “new phase of development” and enable it to quickly expand capacity further.