Daqo’s net profit slides to $12.1 million in Q2

External sales of polysilicon jumped 6.48% from the January-March period to 4,497 metric tons (MT), at the upper end of the company's guidance for the second quarter. Daqo said that its external sales included shipments to its wafer manufacturing unit in the city of Chongqing. The subsidiary sold roughly 27 million solar wafers in the three months to June 30, according to an unaudited earnings statement.

Daqo said it has started to see a “fairly significant shortage” of polysilicon in the Chinese market since the end of July, with ongoing improvements in pricing. “China’s PV market demand continues to be strong, driven by Top Runner projects as well as distributed generation,” said Daqo CEO Gongda Yao.

Daqo produced 4,993 MT of polysilicon in the April-June period, up 1.3% from the preceding quarter. Average polysilicon production costs edged up to about $8.53/kg in the three months to the end of June, from $8.41/kg in the January-March period. However, the average selling price (ASP) of polysilicon fell from $16.66/kg in the first three months of the year to $13.58/kg in the second quarter.

“Due to downstream customer inventory management at the end of the first quarter, ASPs fell in April, but (they) started to recover in May,” said Yao. “In the third quarter, customer demand has remained robust, with pricing continuing to improve.”

It plans to conduct annual maintenance at its polysilicon production facilities in China’s remote Xinjiang region in September and October, which will disrupt production for about two weeks. It therefore expects to produce between 4,200 MT and 4,500 MT of polysilicon in the third quarter, with external sales likely to range between 3,700 MT and 4,000 MT. By volume, Daqo expects to sell 25-25.5 million wafers in the three months to the end of September.

Chongqing-based Daqo posted a full-year net profit of $43.5 million in 2016, up from $13 million in the preceding year.