Daqo cuts Q2 sales guidance, keeps 2018 production plan

Chinese polysilicon maker Daqo New Energy Corp (NYSE:DQ) today cut its polysilicon and wafer sales guidance for the second quarter of 2018 as China's shift on solar policy has rattled customers.

The company, however, kept its full-year forecast for polysilicon production at 22,000 tonnes to 23,000 tonnes and said that during the first two weeks of July its shipments returned to normal levels.

Second-quarter polysilicon sales to external customers are estimated at 3,800 tonnes-3,900 tonnes, while the previous guidance was for between 5,300 tonnes and 5,500 tonnes. Daqo New Energy produced 5,659 tonnes of polysilicon in the period, in line with the guidance of 5,600 tonnes-5,800 tonnes. The company said it sold about 2,600 tonnes of polysilicon during the first two weeks of July and reduced inventory to low levels.

Wafer sales in the quarter are expected to have been 9.5 million to 10 million pieces, below the previous guidance of 15 million to 20 million pieces.

Daqo New Energy attributed the revisions mainly to the new solar photovoltaic (PV) policies in China unveiled on May 31 which reduce solar installation quotas and feed-in tariffs (FiT) in the second half of 2018. The company said that the policy shift created significant uncertainty in the domestic solar market and that due to volatile polysilicon average selling prices (ASPs), a significant number of customer orders were not confirmed until the beginning of July. Prices have, however, stabilised over the past two weeks, according to the announcement.

Chief executive Longgen Zhang said that the company maintained its production schedule "believing that polysilicon ASPs would eventually stabilize and delayed shipments until demand returned in early July."

"We are currently running at full production capacity with low levels of inventory, which allows us to reiterate our full year production guidance," he added.

According to the CEO, the new Chinese policy has not impacted the company's long-term plans to further increase capacity.

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