#China #Shanghai #Daqo New Energy #polysilicon #Solar PV

Daqo New Energy Reports Mixed Results Amid Solar Industry Challenges

Daqo New Energy Corp. (NYSE: DQ), a notable player in the high-purity polysilicon sector for solar energy, announced its unaudited financial results for the second quarter of 2025. The latest report reveals a complicated picture, evoking both operational advancements and significant market hurdles.

Financial Highlights

As of June 30, 2025, the company's total cash and short-term assets stood at approximately $2.06 billion, a slight decrease from $2.15 billion at the end of the previous quarter. This solid foundation comes amid a backdrop of financial volatility within the solar PV industry, marked by declining market prices resulting from overcapacity and elevated inventory levels.

Daqo's polysilicon production during Q2 2025 reached 26,012 metric tons (MT), an increase from 24,810 MT in Q1. However, sales experienced a sharp decline, with only 18,126 MT sold compared to 28,008 MT in Q1. This drop in sales reflects the broader market trend as the average selling price (ASP) of polysilicon fell to $4.19/kg, down from $4.37/kg in the previous quarter.

Despite the increase in production, revenue for the quarter was only $75.2 million, significantly lower than $123.9 million in Q1 and a stark contrast to $219.9 million in Q2 2024. Gross losses were reported at $81.4 million, with a gross margin of -108.3%. Notably, the net loss attributable to Daqo's shareholders stood at $76.5 million, worse than $71.8 million in the previous quarter, echoing the broader struggles faced by the solar industry.

Operational Performance

Despite the challenges in market conditions, Daqo maintained a manageable cash cost of $5.12/kg for polysilicon production, down from $5.31/kg in Q1, presenting a positive trend amidst a tumultuous market. Management highlighted maintaining a strong balance sheet, with no financial debt, providing a buffer against the pressures of the industry.

Operating at about 34% of its capacity, the company reflected strategic caution in its operations. The lower utilization level has positively impacted cash costs, reflecting an organization that’s aligned with market realities while also working to sustain operational efficiency.

Looking ahead, Daqo expects to produce between 27,000 MT and 30,000 MT of polysilicon in Q3 2025, and the annual production target for 2025 is anticipated to be between 110,000 MT and 130,000 MT.

Market Dynamics

The challenges faced during Q2 were punctuated by a notable cyclical downturn in the solar market accelerated by aggressive pricing and increased competition. The fluctuating landscape was underscored by China's dramatic fluctuations in installation rates, dropping to 14GW in June from 93GW in May. Furthermore, polysilicon prices are becoming increasingly sensitive to regulatory environments and government initiatives aimed at stabilizing the industry.

Daqo’s CEO, Xiang Xu, stated that although the current market is difficult, the solar PV industry is expected to recover as measures are taken to address excess capacity and market instability. The management team remains confident in Daqo’s ability to navigate these turbulent waters, aided by a solid balance sheet and robust operational strategies.

Future Prospects

As the solar industry grapples with challenges, Daqo New Energy aims to harness long-term growth potential. The company remains committed to its strategic goals of improving efficiency and reducing costs while remaining a key player in the evolving landscape of renewable energy. As solar energy continues to gain traction as a sustainable alternative, Daqo is well-positioned to leverage its technological advantages to meet growing global demand.

Despite the current financial losses, Daqo New Energy’s focus on strategic resilience and operational excellence positions it favorably for future recovery and success in the renewable energy sector.