REC silicon posted strong financial results for the third quarter, increasing its EBITDA to $3.6 million, up from $1.3 million in the previous quarter. The company cites high sales volumes and improved production costs as the drivers behind this increase.
Sales volume reached 4,091 metric tonnes (MT) for the quarter. 2,835 MT of polysilicon was produced, slightly below guidance of 3,070 MT. REC’s production cost for its fluidized bed reactor (FBR) technology drop to $10.4/kg – 9.6% below the guidance of $11.5/kg.
Stable operations, reduced maintenance and ongoing efforts to increase efficiency are cited as the reason for the improved production costs, and the company appears confident in the low-cost potential of its FBR technology.
Despite the strong quarter, REC is feeling the effects of the continuing trade dispute between the U.S. and China, and recently laid off 30 employees at its U.S. facility in Butte, Montana. The company will continue to operate its Moses Lake polysilicon production facility at reduced capacity, stating that “FBR production will return to full capacity when the trade dispute is resolved or when market conditions dictate.”
Polysilicon prices increased during the quarter, due to maintenance and other outages limiting supply. The average price outside of China rose to $13/kg outside of China, and $19/kg within.
While REC stated that it “remains focused on identifying sales opportunities outside of China to mitigate the impact of the trade war”, the company is moving forward with plans to tap the more lucrative Chinese market through a joint venture production facility.
REC now expects to bring the first silane gas and FBR production online before the end of the year, and states that it is continuing to negotiate for deferral of the remaining $169 million in capital contributions until after 2018.