Daqo to expand polysilicon production as costs targeted at US$14/kg

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Stabilizing polysilicon prices and recent technical upgrades to its polysilicon production facilities are behind Daqo New Energy’s plan to boost production in the second-half of the year in a bid to reach production costs as low as US$14/kg.

Gongda Yao, Chief Executive Officer of Daqo said, “In the second quarter of 2013, our Xinjiang polysilicon facilities continued to contribute positive cash flow. In April, we successfully conducted several technical improvement projects which reduced our production cost below US$16/kg, which is significantly lower than our original target of us$20/kg. We expect our Xinjiang facilities to generate positive operating income in the third quarter of 2013. We are also making great effort to maximize our capacity in Xinjiang. We plan to expand our capacity in Xinjiang to 6,150 MT by the end of 2013. By achieving that, we expect that we can reduce our cost to the level of US$14/kg at that time.”

However, to achieve lower production costs and reduce operating losses, Daqo said that it was closing its polysilicon facility in Wanzhou it would move polysilicon equipment to its Xinjiang facilities.

The company said the relocation would result in impairment charges of US$158.4 million.

Other measures included increasing wafer capacity to 6 million pieces per month at it Wanzhou facilities in order to achieve economies of scale, which would be implemented by the end of 2013. Daqo had wafer shipments in the second quarter of 2013 of 7.1 million pieces (revenue of US$7.1 million).

The company posted improving shipments and revenue for the second quarter. Polysilicon shipments were approximately 975MT (revenue of US$16.4 million), while shipping 41MT of multicrystalline silicon blocks (revenue of US$4.3 million).

Combined revenue in the second quarter was US$27.8 million, compared to $14.5 million in the first quarter of 2013 and US$27.6 million in the second quarter of 2012.

However, the company generated a gross loss of US$10.2 million, compared to $12.9 million in the first quarter of 2013 and a negative gross margin of 36.7%, compared to negative 89.0% in the first quarter of 2013. 

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