The continued decrease in polysilicon prices has halved Daqo New Energy’s revenues during the second quarter of 2023.
During the same period a year ago, the polysilicon producer had registered revenues of US$1.2 billion, while in Q2 2023 the revenue decreased to US$636 million, continuing the downtrend registered in the previous quarter.
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This was due to the average selling price (ASP) of polysilicon plummeting from quarter to quarter, from US$27.83/kg in Q1 2023 to US$12.33/kg in Q2 2023 and was mitigated through an increase in volume sales that nearly doubled.
Polysilicon volume sales in Q2 2023 reached 51,550 in Q2 2023, while in Q1 2023 the company registered a sales volume of 25,284MT. As polysilicon volume sales exceeded production in Q2 2023, the company reduced its inventory in the Xinjiang plant to less than a week’s production volume, according to Longgen Zhang, former CEO of Daqo New Energy.
Zhang, said: “The polysilicon industry experienced increased challenges and substantial price volatility during the second quarter. As several new polysilicon facilities and new entrants finally started production with some reaching full production in the first half of this year, the shortage of polysilicon of the past two years came to an end. The increased supply ultimately led to relative oversupply and excess industry inventory.”
During the second quarter of this year, Daqo New Energy’s polysilicon plant in Inner Mongolia reached full production capacity in June for Phase 5A of the project, adding 100,000MT of annual capacity and bringing the company’s total polysilicon nameplate to 205,000MT.
As the polysilicon producer continues to add capacity, its production volume continues to increase from the previous quarter from 33,848MT in Q1 2023 to 45,306MT in Q2 2023. This is Daqo New Energy’s highest volume increase from quarter to quarter, as shown in the chart below.
Average production cost for polysilicon continued the decrease shown in Q1 2023, when it was at US$7.55/kg, and reached US$6.92/kg in Q2 2023 due to improvements in manufacturing efficiency and reduction cost in metallurgical-grade silicon.
In its guidance for Q3 2023, Daqo New Energy expects to reach a production volume of polysilicon between 55,000-57,000MT, a 21 to 26% increase from Q2 2023, while the annual capacity for 2023 remains unchanged to between 193,000-198,000MT, representing a 44 to 48% increase from the previous year.
Moreover, the company announced changes in the leadership, with Longgen Zhang stepping down as chief executive officer and director of Daqo New Energy, with immediate effect and due to personal reasons, while Guangfu Xu stepped down as chairman of the board of directors. Xiang Xu, who served as director of the company since its initial public offering and was vice chairman of the board since June 2022, has been appointed as the new CEO and chairman of the board, with immediate effect.
