Daqo New Energy Corp. reported its unaudited first‑quarter 2026 results, posting a net loss of $88.4 million and a loss per basic American Depositary Share of $1.31. Revenue for the quarter was $26.7 million, a decline of 78.5% year‑over‑year and 87.9% sequentially, falling far short of the consensus estimate of roughly $167 million.
The company produced 43,402 metric tons of polysilicon but sold only 4,482 metric tons, reflecting a sharp contraction in sales volume. The average selling price was $5.96 per kilogram, only slightly above the average production cost of $5.95 per kilogram, which left the company unable to cover its cost base and contributed to a gross loss of $139.4 million and a negative gross margin of 521.5%.
The large inventory impairment charge was the primary driver of the gross loss. Management explained that the market price for polysilicon had fallen below production costs, prompting a strategic decision to limit sales in order to avoid selling below cost. This approach, while preserving long‑term profitability, resulted in a dramatic revenue shortfall and a deep net loss for the quarter.
Daqo’s guidance for the remainder of 2026 reflects a cautious outlook. Production for the second quarter is expected to be between 35,000 and 40,000 metric tons, and full‑year production guidance is 140,000 to 170,000 metric tons, well below the company’s nameplate capacity of 305,000 metric tons. The company’s balance sheet remains strong, with $559.4 million in cash and equivalents and no debt, providing liquidity to navigate the current downturn.
CEO Xiang Xu noted that “market sentiment across the solar PV industry remained cautious amid seasonal softness and elevated inventory levels.” Management also highlighted that seasonal softness, high inventories, rising module input costs, and geopolitical tensions are depressing solar demand and intensifying industry overcapacity, which has pushed polysilicon prices below production costs. The company indicated that actual production levels and sales volumes will depend significantly on the implementation and effectiveness of government price‑law enforcement policies.
Headwinds for Daqo include severe industry overcapacity, pricing below cost, seasonal softness, high inventory levels, rising module input costs, and geopolitical tensions. Tailwinds are the company’s strong liquidity position, zero debt, and focus on cost optimization and technological advancement, which together provide a foundation for a potential recovery as market prices stabilize and policy interventions take effect.
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