Daqo New Energy, the low-cost leader of Chinese solar polysilicon production, released another quarter of solid results today. The company reports $58 million in revenue, and an enviable 23% operating margin, and US$8.3 million in net income.
Around 70% of Daqos revenue came from external sales of the polysilicon which it produces in Western China. During the quarter the company produced 3,405 metric tons of polysilicon, and sold 2,905 tons externally, with another 500 metric tons going to the companys wafer subsidiary.
Wafer sales comprised the remainder of Daqos revenues, and the company reports shipping around 22 million wafers.
Polysilicon prices crashed in late 2015 and were low during Q1, and Daqo reports an average selling price of $13.72 per kilogram (kg) during the quarter. However, During Q1 Daqo brought down production costs again to a record US$9.65/kg, even lower than the $9.74/kg that it reported in Q4 2015, on the back of full capacity utilization. As such the companys polysilicon operations remained highly profitable.
Daqo notes that polysilicon spot prices started increasing in February, due to significant new wafer capacities coming online, which in turn is a reaction to a shortage of multicrystalline wafer capacity. However, the company says that it was not able to take advantage of this rise in spot prices, as most of the polysilicon it sells is under long-term contracts.
Daqo also says that polysilicon prices in China are improving. While there was not mention of trade action during the companys results, this is likely the result of restricted foreign supply.
During April and May, we saw further improvements in polysilicon market prices, which by now are up by approximately 40% to 45% from the January level, driven by low levels of channel inventory and an increase in downstream customer demand, stated Daqo CEO Gongda Yao.
In its recent rankings of polysilicon and wafer makers, IHS put Daqo as the 10th-largest global polysilicon maker by production in 2015. However given the companys aggressive capacity expansions, the company is listed as the 7th-largest polysilicon maker by production capacity in 2016.