Key Highlights

  • DQ reported third-quarter revenue of $194.2 million, up from $62.7 million in the second quarter and down from $244.6 million a year earlier.
  • Polysilicon sales volume was 46,910 metric tons, compared with 15,190 metric tons in the second quarter.
  • The average selling price was $4.12 per kg, below the average cash production cost of $4.23 per kg.
  • The net loss attributable to shareholders was $52.9 million, or $0.78 per basic ADS, versus $81.2 million, or $1.20, in the second quarter.
  • Cash and investments stood at $2.06 billion with zero debt, and full-year production guidance rose to 175,000 to 185,000 metric tons.

Daqo Earnings: Why Did Volumes Triple While the Loss Narrowed?

Daqo New Energy (NYSE:DQ) reported third-quarter results before the US open on Tuesday, October 27. Revenue was $194.2 million, up from $62.7 million in the second quarter and below the $244.6 million of a year earlier, a decline of about 20.6% as calculated. The net loss attributable to shareholders was $52.9 million, or $0.78 per basic ADS, against $81.2 million, or $1.20, in the second quarter.

The improvement came from volume rather than price. Sales reached 46,910 metric tons, roughly three times the 15,190 metric tons sold in the second quarter. The loss per ADS was wider than the $0.48 loss as screened, while revenue exceeded the roughly $139.5 million that market estimates implied.

Management guided fourth-quarter production to roughly 35,000 to 45,000 metric tons and raised full-year 2026 production to roughly 175,000 to 185,000 metric tons, from 160,000 to 180,000 metric tons previously.

Polysilicon Pricing: Is $4.12 Per Kg Enough to Cover Costs?

The average selling price was $4.12 per kg, slightly above the $4.04 per kg of the second quarter. That was still below the average cash production cost of $4.23 per kg.

The second quarter showed how deep the margin problem had become: gross margin was negative 132.0% on a total production cost of $5.95 per kg, with inventory impairment provisions of $55.7 million.

Daqo is a China-based producer of polysilicon, the raw material used in solar wafers and cells.

Balance Sheet: How Large Is the $2.06 Billion Cash and Investments Cushion?

Cash, investments, bank notes receivable and fixed-term deposits totaled $2.06 billion, up from $1.92 billion at the end of the second quarter, and the company reports no debt. At June 30, cash, cash equivalents and restricted cash alone were $555.3 million.

In the first half, net cash used in operating activities was $276.2 million, compared with $105.4 million a year earlier.

Management is also evaluating lower near-term utilization.

Policy and Diversification: What Else Did Management Flag?

The second-quarter release cited a mandatory energy consumption standard of 6.3 kgce/kg that takes effect on January 1, 2027, and an August 6 initiative in which Daqo and seven other producers agreed to end below-cost sales. Realized prices of about $4 per kg suggest the effect of that pact is still limited.

Management is also pursuing the manufacture of power equipment for AI data centers, following an investment agreement signed on June 3 in Kunshan with its affiliate Daqo Group.

What to Watch Next: Does the Gap Between Price and Cash Cost Close?

Key readings ahead are whether the average selling price moves above the $4.23 per kg cash cost, whether fourth-quarter output lands within guidance, and whether utilization is cut. The energy standard and the AI data center power project are the other items to follow.