SMM News: 1. Daquan Silicon may be in stock at the end of the first quarter.
According to Daquan's results, production and sales for five quarters from the first quarter of 2018 to the first quarter of 2019 are shown in the figure below.
Depending on monthly production and sales, if inventories are zero at the end of 2017, there may be 1100 tons of inventories by the end of the first quarter of 2019, as shown in the table below.
2. Costs continue to fall, but profits fall significantly compared with the same period last year
From the first quarter of 2018 to the first quarter of 2019, the cost of silicon continued to fall. However, as a result of the sharp decline in prices after 531 in 2018, the price difference between the selling price and the total cost has fallen significantly, as shown in the figure below.
In the first and second quarters of 2018, the difference between the average selling price and the total cost was more than $7 / kg, but after 2018, although the cost fell sharply, the price difference fell back to about $2 / kg. Due to better cost control, the spread in the first quarter of 2019 was better than in the second half of 2018.
Table: comparison of cost and selling price of all silicon in the last 5 quarters (US $/ kg)
3. Gross profit margin stabilized at around 20%
In the first and second quarters of 2018, the gross profit margin was above 40% and the net profit margin was above 30%! after 531, 2018, the net profit margin even fell below 10% in the third quarter of 2018; in the last two quarters, the gross profit margin remained in the early 20%. In the first quarter of 2019 and the first quarter of 2018, the decline was significant compared with the same period last year, as shown in the figure below.
Table: changes in profits in the last five quarters
Sales in the second quarter of 2019 are expected to be lower than in the first quarter
Affected by the production of the capacity de-bottleneck project, the company expects to produce 7200 to 7400 tons of polysilicon and sell 7100 to 7300 tons of polysilicon in the second quarter of 2019, with a depreciation production cost of about $8.0~8.5/kg. When the capacity climb is completed by the end of June, the cost will be reduced to $7.5/kg. Taking into account the impact of annual maintenance, the company expects to produce about 37000 to 40000 tons for the whole of 2019.
Mr. Zhang Longgen, Chief Executive Officer of Daquan New Energy Company, said:
"We are currently working on a capacity removal bottleneck project to increase our annual production capacity by 5000 tons through the replacement of some of the more advanced reduction furnaces. The project, which is slightly ahead of schedule, is expected to be completed in early June 2019 and start climbing. The production phase will have a temporary impact on production and cost, and we expect silicon production to be approximately 7200 to 7400 tons in the second quarter of 2019 at a production cost of approximately $8.0~8.5/kg. We expect to complete the capacity climb by the end of June, when the annual capacity will reach 35000 tons, and the production cost will be reduced to the level of $7.5/kg. "
According to our current estimates, the 4A project will be completed in the fourth quarter of 2019 and is expected to reach an annual full capacity of 70000 tons by the end of March 2020. "
We remained profitable in such a tough market environment in the first quarter. Over the same period, many existing silicon manufacturers have fallen into serious losses. The commissioning and climbing of other new production capacity has not been as smooth and smooth as expected. Some manufacturers have delayed their projects, while others have encountered difficulties in the process of going into production and climbing and have to be temporarily shut down. Moreover, the initial quality of these new production capacity is poor, unable to produce a high proportion of single crystal material, resulting in the market single polycrystal price difference continues to widen. We expect the exit of some high-cost manufacturers to ease the temporary imbalance between supply and demand.