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

Daqo New Energy Reports First Quarter 2025 Financial Results

Daqo New Energy Corp., a prominent player in the solar polysilicon sector, released its financial results for the first quarter of 2025, revealing a landscape significantly shaped by market pressures and operational challenges. The company, which trades under NYSE: DQ, reported that despite some operational hurdles, it managed to maintain a solid balance sheet with no financial debt, a crucial factor in its strategic resilience.

Financial Performance Overview

Daqo’s financial performance showed a mixed bag. The total cash reserves, including short-term investments and bank deposits, stood at approximately $2.15 billion at the end of March 2025. This figure marked a slight decrease from $2.22 billion as of the previous quarter. However, the company’s polysilicon production output dipped significantly, reported at 24,810 metric tons for Q1 2025, compared to 34,236 metric tons in Q4 2024, illustrating the impact of sustained market overcapacity.

Furthermore, sales volumes saw a similar decline, with Q1 sales totaling 28,008 metric tons, down from 42,191 metric tons in the last quarter. This decline in both production and sales was echoed in the company’s revenue, which dropped to $123.9 million, sharply lower than $195.4 million for Q4 2024 and $415.3 million reported in Q1 2024.

Cost and Profit Margin Dilemmas

With a challenging pricing environment, the average total production cost for Daqo’s polysilicon rose to $7.57 per kilogram, compared to $6.81 per kilogram in the previous quarter. Meanwhile, the average selling price (ASP) of polysilicon also saw a decrease, falling to $4.37 per kilogram from $4.62. This culminated in a gross loss of $81.5 million for the quarter and a gross margin of -65.8%, highlighting the continuous pressure the company faces in maintaining profitability amid dwindling prices and higher operational costs.

Operational Insights from Leadership

CEO Xiang Xu addressed these challenges, emphasizing the industry-wide impacts of continued overcapacity and the persistence of prices below cash cost levels. Although operational losses were noted, they have shown signs of narrowing when compared sequentially, indicating some level of responsiveness to the market dynamics. As of late March, the operational rate across Daqo’s facilities stood at around 33% of the company's nameplate capacity.

Looking ahead, Daqo expects its production volume in Q2 2025 to remain within a range of 25,000 MT to 28,000 MT, contributing to a full-year production target of 110,000 MT to 140,000 MT. These projections signal the company’s ongoing adaptation to market conditions while preparing for a rebound in demand.

Industry Context and Future Outlook

On a broader industry scale, the first quarter of 2025 saw an impressive increase in new solar PV installations in China, reaching 59.71 gigawatts—a 30.5% increase from the previous year. This indicates a robust growth trajectory for solar energy despite the current pricing challenges faced by polysilicon producers. The recent introduction of market-based reforms for renewable energy tariffs by Chinese authorities is expected to influence future pricing dynamics, potentially resulting in healthier market conditions and improved profitability in the medium term.

Daqo New Energy’s strategic focus remains on capitalizing on long-term growth within the global solar PV market. By enhancing its product efficiency and optimizing production costs, Daqo aims to strengthen its competitive position. As one of the lowest-cost producers of high-purity polysilicon, the company's robust financial footing allows it to navigate these turbulent times effectively, readying itself to seize forthcoming growth opportunities as the market stabilizes.

As they proceed into the second quarter, all eyes will be on Daqo to see how they maneuver through the challenges that lie ahead, particularly in terms of production scalability and cost management while striving to maintain their leadership position within the solar polysilicon market.