Chinese PV Industry Brief: Daqo wiped debts as poly price continued to rise

The worldwide solar boom is proving so profitable the polysilicon manufacturer is even thinking of turning to PV panels to power its manufacturing operations, rather than cheap coal.

November 3, 2021

With manufacturing curtailment affecting the solar industry, as a result of much-publicized electricity rationing and emissions caps in China, the latest financial update published by polysilicon manufacturer Daqo appears to acknowledge that the measures are having their desired decarbonizing effect.

While Daqo New Energy chief executive Longgen Zhang used his company’s third-quarter update to praise the authorities for responding to electricity shortages by ramping up coal production – and complained about the difficulties of finding new production sites against emissions reduction regulation – he added: “We will be committed to using more renewable energy in our next polysilicon project in order to secure the energy quota, which will allow us to gradually realize the idea of ‘green poly’ or ‘solar for solar’.”

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Regardless of the difficulties of securing permits for more cheap-coal-fired solar panel manufacturing facilities, however, Daqo is surfing a global solar boom which has seen rising solar equipment costs apparently failing to dent demand thus far.

Whilst more expensive input material silicon powder raised Daqo’s average polysilicon production cost, from US$6.31/kg in the second quarter to US$6.84 in July-to-September, that rise was passed on to solar manufacturers further down the supply chain in the form of an average selling price during the last three-month window of US$27.55/kg, up from US$20.81 in the previous quarter.

The soaring price of the solar panel raw material was demonstrated by the fact Zhang, in comments made in the update published on Thursday, referred to polysilicon’s “current level” of US$33-35/kg.

The lower, third-quarter price level was sufficient for the company to generate enough revenue – US$586 million – to pay off all its debts, after it banked a quarterly record net profit of US$292 million, from gross three-month profits of US$435 million.

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And with the business running its production lines at full capacity to manufacture 62,970 tons of poly to the end of September – of which 63,714 tons were sold – Daqo expects to produce 83-85,000 tons for the full year.

Zhang warned those rising silicon powder prices would continue to affect the numbers in the current quarter but said he expected that input cost to stabilize in the first half of next year as new supply comes online and as Beijing relaxes energy and emissions restrictions for the new financial year. Strip silicon powder out of the equation and Daqo’s average production costs actually fell 1%, quarter on quarter, the CEO added.

Tongwei

Elsewhere, the Yongxiang Co Ltd polysilicon manufacturing unit of solar cell maker Tongwei, yesterday commissioned a new poly manufacturing facility with a planned capacity of 51,000 metric tons. Located in Leshan, in Sichuan province, the fab will produce material compatible with n-type monocrystalline solar products. With the new factory, and another 50,000-ton facility under construction in Yunnan province, the company will reach an annual production capacity of 180,000 tons this year. Tongwei is also expanding capacity with two factories under development in Inner Mongolia and Yunnan. Those two facilities will have a combined output capability of 250,000 tons.

Hong Kong-listed renewables investor Kongsun Holding yesterday announced it will sell seven solar farms with a total generation capacity of 140 MW to Xinhua Power, for RMB242 million (US$37.8 million). Kongsun said it will retain 17 solar projects with a total generation capacity of 530 MW after the sale.

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