Wacker forced to lower 2019 group profits as polysilicon price declines continue

Facebook
Twitter
LinkedIn
Reddit
Email
The company guided group sales of €1,270 million for the third quarter of 2019, while guiding EBITDA of €270 million, helped by a special income of about €112 million in insurance compensation for the damage incurred following a major explosion at its newest polysilicon plant in the US in 2017. Image: Wacker

Major polysilicon producer Wacker Chemie has warned its overall group profitability for 2019 would be around 30% lower than the prior year, due to continued weak demand from the solar industry in China and continued polysilicon prices declines to industry record lows.

Rudolf Staudigl, WACKER's CEO said, “Our expectations have declined primarily because prices for polysilicon remain extremely low. Many market experts anticipated a price recovery for solar silicon in the second half-year – an assumption that was reflected in our previous guidance. But the average prices for this material have not improved. Instead, they fell further in the third quarter due to overcapacity created by Chinese competitors.”

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

PV Tech had previously highlighted the challenges facing Wacker in competing in the polysilicon market that is dominated by demand from the solar manufacturing industry in China. The Chinese government is supporting China-based polysilicon producers in becoming 100% self-sufficient in polysilicon production.
 
Weak demand for Wacker’s high-purity polysilicon in China, is both due to increased capacity expansions by competitors in China as well a slow pick-up in end-market demand, due to  new support mechanism for downstream solar markets only being finalised and published mid-year, long after the halt to utility-scale projects and DG markets in May, 2018, under the 531 New Deal.

According to the China Nonferrous Metals Industry Association, global polysilicon production in the first half of 2019 reached 241,000MT, just 2.6% higher than the prior year period, while while total demand was 229,000 tons, representing a year-on-year increase of 6.51%.

However, polysilicon production output in China was said to be approximately 154,000MT, a year-on-year increase of 9.2%, while total demand in China was 212,000MT. Total supply was 221,000MT, while demand was for 212,000MT, keeping prices at record lows, before an expected demand increase in the second-half of the year as utility-scale projects in China were expected to ramp again after the damaging hiatus.

The China Nonferrous Metals Industry Association also highlighted that polysilicon ASPs had declined by over 47% since the prior year period, although fluctuations were experienced. Some major Chinese competitors have also been impacted by the significant ASP declines, while still ramping new capacity. 

During this period, Wacker has maintained full-capacity production of polysilicon, increasing stockpiles ahead of a pick-up in demand and hoped for ASP increases.

Wacker’s management noted that the increasing weakness in the global economy had impacted all of its business divisions.

The company guided group sales of €1,270 million for the third quarter of 2019, while guiding EBITDA of €270 million, helped by a special income of about €112 million in insurance compensation for the damage incurred following a major explosion at its newest polysilicon plant in the US in 2017. 

The special income in the quarter would be allocated to the polysilicon division as a one-off benefit. 

Wacker’s polysilicon division had previously reported second quarter 2019 revenue of €169.9 million, down 30% from the prior year period, while EBITDA had been €5.7 million, 85% lower than the prior year period.

The company is to report Q3 results October 24, 2019.

8 October 2024
San Francisco Bay Area, USA
PV Tech has been running an annual PV CellTech Conference since 2016. PV CellTech USA, on 8-9 October 2024 is our second PV CellTech conference dedicated to the U.S. manufacturing sector. The event in 2023 was a sell out success and 2024 will once again gather the key stakeholders from PV manufacturing, equipment/materials, policy-making and strategy, capital equipment investment and all interested downstream channels and third-party entities. The goal is simple: to map out PV manufacturing in the U.S. out to 2030 and beyond.

Read Next

Subscribe to Newsletter

Upcoming Events

Solar Media Events
May 21, 2024
Sydney, Australia
Solar Media Events
May 21, 2024
Napa, USA
Solar Media Events
May 22, 2024
London, UK
Upcoming Webinars
May 29, 2024
11am (EDT) / 5pm (CEST)