GCL-Poly increases polysilicon and wafer production to offset ASP and profit decline

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The largest polysilicon producer GCL-Poly Energy Holdings increased production of both polysilicon and solar wafers to offset ASP declines that limited first half year revenue and profits. 

Increased shipments of polysilicon into China by major foreign producers ahead of higher import duties and the elimination of duty concessions to Chinese polysilicon consumers that use the polysilicon in finished PV products subsequently re-exported overseas. 

The ‘processing trade’ policy, had for many years enabled Chinese PV manufacturers to benefit from the higher quality polysilicon produced in the US, Europe and South Korea. The reinforced US anti-dumping duties on Chinese and Taiwanese solar cells led to further retaliation measures by the Chinese government. 

Zhu Gongshan, Chairman and CEO of GCL-Poly commentary in the company’s interim year report noted: “Owing to the midstream production shrinkage in their domestic markets, major polysilicon manufacturers in the U.S., Germany and Korea are now heavily relying on and has been dumping enormous volume to China market, by taking advantage of processing trade policy to avoid the anti-dumping taxes imposed by the Chinese Ministry of Commerce. Therefore, the polysilicon price in China dropped persistently in the first half of this year, causing huge losses across [the] global polysilicon industry.”

The company said that polysilicon ASP’s in the first half of 2015 were US$17.2/kg, compared to US$22.1/kg in the prior year period, over a 20% decline.

Wafer ASP’s averaged US$0.195/W in the reporting period, down from US$0.225/W in the prior year period, over a 14% decline.

Production expansion

In the first half of the year, GCL-Poly increased polysilicon production by 13.7%, compared to the prior year period, resulting in 36,768MT being produced and annual production expected to be 70,000MT. The company ran polysilicon plants at full-capacity in the period.

Due to ASP pressures and the overall financial position of the company, emphasis was placed on shifting polysilicon sales in-house to its solar wafer production facilities. 

GCL-Poly increased wafer production capacity to 14GW in the first half of the year, up from 13GW in 2014. Wafer production in the reporting period was approximately 7,102MW, an increase of 17.5% from 6,042MW produced in the prior year period. 

Financial results 

GCL-Poly reported Solar Material Business revenue of HK$11,412.0 million, (US$1.47 billion), down 4% on the prior year period. 
Polysilicon sales contribution to total group revenue dropped to 8.0%, while wafer sales contribution increased to 86.9%.

Net profit margin of Solar Material Business for the six months of 2015 was 8.7%, compared to net profit margin of 9.5% in the same period in 2014.

Significant cost reductions were achieved in both polysilicon and wafer operations, offsetting much of the ASP decline in the reporting period. 

Revenue for its Solar Farm Business was HK$384.4 million (US$49.6 million). 

Listed subsidiary, GCL New Energy expanded solar farm operations to include an aggregate installed capacity and grid-connected capacity of 772.5 MW and 645.3MW respectively.

Revenue contributed by the New Energy Business amounted to HK$1,135.2 million (US$146.4 million.

GCL-Poly’s total group revenue was HK$17.94 billion (US$2.31 billion), a 4.2% increase as compared with the same period in 2014. 

The gross profit was approximately HK$3.89 billion (US$501 million), a 5.9% increase from the prior year period. 

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