The central theses:
- Daqo New Energy has signed an agreement to sell 150,300 tons of polysilicon to a Chinese polysilicon wafer maker over the next five years
- Daqo and its global competitors are currently adding large new capacity that will be operational over the next year
By Doug Young
Build it and they will come, as the saying goes.
but Daqo New Energy Corp. DQ isn’t taking any chances, or at least doesn’t anticipate that solar wafer makers will automatically queue up to buy its products as it embarks on a massive expansion to triple its capacity in the next few years. After announcing a modest new supply deal in February, the leading polysilicon maker has just announced a similar but much larger deal.
The bigger story is that polysilicon makers are scrambling to add new capacity as prices have soared to record highs over the past two years on booming demand for the key component in solar cell production. The solar building craze has gained momentum this year after Russia’s invasion of Ukraine, which has bolstered Western countries’ determination to wean off their reliance on fossil fuels, which are Russia’s biggest export.
But after a spectacular surge that has seen polysilicon prices rise more than sevenfold over the past two years, observers expect the trend will finally reverse next year as huge new capacity comes online. Daqo reflects the broader trend, with the company’s capacity expected to roughly triple from late last year as it builds a major new facility in China’s Inner Mongolia region, the first phase of which is expected to come online in the second quarter of next year.
Accordingly, Daqo is trying to get customers to use some of this new capacity when it starts production.
In its latest move, Daqo announced on Friday that it has agreed to ship 150,300 tonnes (MT) of mono-grade, high-purity polysilicon between November 2022.
