China-based polysilicon manufacturer Daqo New Energy Corporation reported a significant decline in both revenue and net income for the second quarter (Q2) of 2024 due to a drop in polysilicon prices below production costs.

The company’s Q2 revenue fell to $219.9 million, a 65% year-over-year (YoY) decrease from $636.7 million. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also took a hit, with Q2 showing a loss of $144.9 million from a profit of $229.9 million last year.

The quarterly adjusted net loss amounted to $98.8 million, starkly contrasting the $134.5 million net income reported in the corresponding quarter of the previous year.

Polysilicon production volume rose slightly to 64,961 metric tons (MT) from 62,278 MT in Q1 2024. However, sales volume declined, with 43,082 MT sold, down from 53,987 MT in the prior quarter.

The average total production cost per kilogram of polysilicon decreased marginally to $6.19 in Q2 2024, compared to $6.37 in Q1 2024. Meanwhile, the average selling price (ASP) for polysilicon dropped to $5.12/kg from $7.66/kg in Q1 2024.

“The solar industry experienced significant challenges during the second quarter, as market prices fell across the solar value chain to below production costs for nearly the entire industry. As end-of-quarter polysilicon ASP fell below our production cost, we were required in accordance with US GAAP accounting rules to record a non-cash inventory impairment expense of $108 million because our inventory market value fell below book value. This had a significant negative impact on our cost of revenue, gross loss, operating loss and net loss,” said Xiang Xu, CEO of Daqo New Energy.

First half 2024

The company’s revenue for the first six months (1H) of 2024 fell by 53% YoY to $635.2 million from $1.35 billion.

EBITDA also took a hit, with 1H showing a loss of $68 million from a profit of $720.2 million in the corresponding period in 2023.

The half-yearly adjusted net loss amounted to $62.8 million, contrasting the $444.7 million net income reported the previous year.

“In light of the current market conditions and pricing, we have adjusted our target production utilization rate for the third quarter and our production plan for the full year. We expect our Q3 2024 total polysilicon production volume to be approximately 43,000 MT to 46,000 MT, as we started maintenance and lowered our production utilization rate to manage support pricing and reduce our cash burn. As a result, we anticipate our full year 2024 production volume to be in the range of 210,000 MT to 220,000 MT,” noted Xu.

Falling polysilicon prices have weighed on Daqo’s earnings for 2023. The company’s net income for the first, second,  third, and fourth quarters fell by 48%, 93%, 84%, and 82%, respectively.