Q2 2025 Daqo New Energy Corp Earnings Call
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Operator: Good day, and welcome to the DAQO NEW ENERGY Q4 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone, and to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jessie Zhao, Director of Investor Relations. Please go ahead.
Good day and welcome to the Daqo New Energy second quarter 2025 earnings conference call.
All participants will be in listen-only mode.
Should you need assistance, please signal our conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions.
To ask a question, you may press star then 1 on a touchtone phone, and to withdraw your question, please press star then 2.
Please note this event is being recorded. I would now like to turn the conference over to Jessie Zhao, Director of Investor Relations. Please go ahead.
Anita Zhu: Hello, everyone. I'm Jessie Zhao, the Investor Relations Director of DAQO NEW ENERGY. Thank you for joining our conference call today. DAQO NEW ENERGY just issued its financial results for the second quarter of 2025, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our Chairman and CEO, Mr. Jiang Xu, our Deputy CEO, Ms. Anita Zhu, our CFO, Mr. Ming Yang, and myself. Today's call will begin with an update from Mr. Xu on market conditions and company operations, followed by a translation from Mr. Xu for Mr. Xu. And then Mr. Yang will discuss the company's financial performance for the quarter. After that, we will open the floor to Q&A from the audience.
Hello, everyone. I'm Jessie Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the second quarter of 2025, which can be found on our website at www.daqo.com. Today, attending the conference call we have our Chairman and CEO, Mr. Janggu.
Our Deputy CEO, Miss Anita Zhu; our CFO, Mr. M; and myself.
Anita Zhu: Before we begin the formal remarks, I want to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the safe harbor provisions of the US Private Security Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding this and other risks is included in the report or document we have filed with a furnished to the Securities and Exchange Commission. These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.
Today's call will begin with an update from Mr. Shu on market conditions and company operations, followed by a translation from Mr. For Mr. And then Mr. Yang will discuss the company's financial performance for the quarter. After that, we will open the floor to Q&A from the audience. Before we begin the formal remarks, I want to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
This statement involves inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding this and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission.
Anita Zhu: All information provided in today's call is as of today, and we undertake no duty to update such information except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts in US dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience. Now, I will turn the call to our Chairman and CEO, Mr. Xiang Xu. Mr. Xu, please go ahead.
These payments only reflect our current and to eliminate review as of today and maybe subject to change our ability to achieve these projections is subject to risks and uncertainties. All information provided in today's call is, as of today, and we are on that, we undertake no duty to update such information, except as required, on the applicable law,
Xiang Xu: 尊敬的各位投资者, 分析师, 晚上好。我是徐翔, 大全新能源的CEO。感谢大家出席大全新能源2025年第二季度业绩交流会。我今天发言的内容, 嗯, 我马上由Anita来翻译一下。她代表我说吧, 第一时间, 因为我觉得这个现在中国的光伏从内卷现在已经慢慢的有所改变。我想有些投资人有些感兴趣的问题, 到时候接受大家的一些提问。谢谢大家。
Also, during the call, we occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Now, I will turn the call over to our Chairman and CEO, Mr. Ming Yang. Please go ahead.
Anita Zhu: Thank you, Mr. Xu. So, hello, everyone. This is Anita, and I'll now deliver on our CEO, Mr. Xu,'s remarks. So, the solar PV industry faced continuous challenges in the second quarter of 2025, with market prices across the solar value chain declining due to industry overcapacity and high inventory levels, remaining below cash cuts levels. As a result, DAQO NEW ENERGY recorded quarterly operating and net losses. Nevertheless, we maintained a strong and healthy balancing with no financial debt. As of June 30th, 2025, the company had a cash balance of 599 million, short-term investments of 419 million, bank loans received about 49 million US dollars, and a total fixed-term bank deposit balance of 994 million US dollars. In total, our financial bank deposit and investment assets, readily convertible into cash if needed, stood at 2.06 billion US dollars, providing us with ample financial liquidity.
Thank you, Mr. Zoo. So, hello everyone. This is Anita Zhu, and I'm now delivering.
Anita Zhu: With no financial debt, our solid financial position brings us confidence and strategic resilience to navigate the current market downturn and remain well-positioned for long-term opportunities. On the operational front, the company operated at a reduced utilization rate of approximately 34% of its main fleet capacity in response to challenging market conditions and reselling prices. Total production volume at our two hospital facilities for the quarter was 29,012 metric tons, within our guidance range of 25,000 tons, the 28,000 metric tons. Towards the end of the quarter, as Chinese authorities intensified efforts to curb this orderly competition, we proactively scaled back new sales orders in anticipation of future price recovery. Accordingly, our sales volume for the quarter decreased to 18,126 metric tons from 28,008 metric tons in the first quarter.
No, our financial bank deposits and investment assets, readily convertible into cash if needed, stood at $2.06 billion, providing us with ample financial liquidity. With no financial debt, our solid financial position brings us confidence in our strategic reliance to navigate the current market downturn and remain well-positioned for long-term opportunity.
On the operational front, the company operated at a reduced declination rate of possibly 30% of its nameplate capacity and responded to challenging market conditions, affecting our selling prices.
Anita Zhu: Due to lower utilization across our factories, idle facility-related costs for the quarter were approximately 1.38 US dollars per kilogram, primarily reflecting non-cash depreciation expenses. On a positive note, the decline in the cost of silicon metal and reduced energy consumption drove our cash costs lowered by 4% to 5.12 US dollars per kilogram, sequentially, including approximately 18 cents per kilogram related to idle facility maintenance. Overall, hospital unit production costs decreased by 4% sequentially to an average of 7.26 US dollars per kilogram, with lower unit depreciation costs resulting from higher production. In light of the current market conditions, we expect our total hospital production volume in the third quarter of 2025 to be approximately 27,000 to 30,000 metric tons. As a result, we anticipate our full year 2025 production volume to be in the range of 110,000 metric tons to 130,000 metric tons.
Total production volume at our 2 hospitals and facility for the quarter was 29,012 metric. Tons within our guidance range of 25,000 tons to 28,000 metric tons towards the end of the quarter, our Chinese authorities intensified efforts to curse this orderly and competition. We proactively scaled back, new sales orders in anticipation of future price recovery accordingly, our sales volume for the quarter decrease to 18,000 and 126 metric tons from 28,000. And 8 metric tons, and the first quarter due to lower utilization across our factories Idol facility related costs for the quarter was approximately 1.3 ft US dollar per kilogram primarily reflecting non-cash different depreciation expenses
On a positive note, we saw a decline in the process of call Meadow and reduced energy consumption. Job or cash costs lowered by 4% to $5.12 per kilogram sequentially, including approximately 18 cents per kilogram related.
To final facility maintenance.
Anita Zhu: During the second quarter, the solar PV industry remained in a cyclical trough, although proactive initiatives started to emerge toward the end of the quarter. On the demand side, China experienced a surge in installation under market-based reform policies and set a new global record with a staggering 93 gigawatts of new solar power capacity added in May. However, installation plummeted to 14 gigawatts in June, falling from loading earlier in the month ahead of the May 31st, 2025 cutoff date for new projects. Poly market prices trended downward during the quarter, falling from RMB 39 to 45 per kilogram in April to 32 to 35 RMB per kilogram by the end of June. According to industry statistics, overall industry poly production for 2025 year-to-date has been running below overall demand and consumption, with monthly supply at approximately 100 to 110,000 metric tons.
Overall policy unit production cost decreased by 4% sequentially to an average of 7.26 US dollar per kilogram with lower units of species and cost resulting from higher production. In light of the current market conditions. We expect our total policy on production, volume the third quarter of 2025 to be approximately a 27,000 to 30,000 metric tons. As a result, we anticipate our full year 2025 production volume to be in the range of 1,000 metric tons to 1 130,000 metric tons. June the second quarter the solar PV industry remained in a second to cross. Although proactive initiative starts to emerge toward the end of the quarter, on the demand side, China experienced a surge in installations under Marketplace reform policies and set a new Global record with a staging 93, gigawatt of new solar, power capacity added in May however installations plummeted to 14 gigs of
A lot in June, calling from loading earlier this month ahead of the May 31, 2025, cutoff date for new projects.
Anita Zhu: As a result, industry inventory decreased by approximately 30,000 to 40,000 tons between January and July, leaving overall industry poly silicon inventory lower than at the beginning of the year. Heading into the third quarter, Chinese authorities have demonstrated increased determination to address irrational competition and initial capacity, with the anti-molition initiative taking a lead growing sectors such as solar PV. On June 29th, an article from China's official newspaper, People's Daily, highlighted the issue of oversupply and disruptive competition in the solar PV industry, calling for measures to curb vicious competition and promote high-quality development. On June 1st, President Xi emphasized the need to regulate disorderly low-priced competition and phased out outdated capacity at the Central Financial and Economic Affairs Commission meeting. The following day, the Ministry of Industry and Information Technology convened a symposium with 14 solar PV companies to accelerate the industry transition toward high-quality growth.
Poly market prices. Trended downward during the quarter falling from R&D 39 to 645 per kilogram in April to 32 to 35 R&B per kilogram by the end of June. According to Industry, statistics overall industry, poly production for 2025 year to date has been running below overall demand and consumption was monthly supply of approximately 100 to 110,000 metric tons as a result energy inventory decreased by approximately 30,000 to 40,000 tons. It's in January and July leaving overall industry, policy policy inventory, lower than at the beginning of the year.
Heading into the third quarter, Chinese authorities have demonstrated an increased determination to address irrational competition and energy capacity with the NTA Evolution initiative. Taking a lead in growing sectors such as solar PV, on June 29th, an article from China's official newspaper, People's Daily, highlighted the issue of oversupply and disrupted competition in the solar PV industry.
Anita Zhu: Most recently, on July 24th, government authorities released a draft amendment to the price law, representing a significant step towards strengthening market supervision and deterring unfair pricing practices. The draft clarifies criteria for identifying unfair pricing behaviors, such as low-price bumping, and strengthens legal accountability for price-related violations. As a result, poly stock sales prices have rebounded in July, and poly future prices surged significantly, supported by favorable factors such as expected higher stock holds and simultaneous increases in downstream product prices. For reference, the 2506-09 contract rose sharply from a low of RMB 30 per kilogram in June 2025 to a record high of 55 RMB per kilogram in July 2025, the strongest level since solar PV. The solar PV industry continues to shift beyond long-term prospects.
Calling for measures to curve. This is composition and promote high quality development on June 1st, president XI emphasized, the need to regulate disorderly at low price competition and phase out of data capacity at the central financial, and economic Affairs, special meeting the following day, the ministry of industry and information, technology can be a symposium with 14 solar PV companies to accelerate the industry's transition toward high quality growth,
Most recently, on July 24th, government authorities released a draft amendment to the price block, representing a significant step towards changing the market to provision and securing all fair pricing practices in the job. It clarifies criteria for identifying unfair pricing and behaviors, such as low pricing in space, and strengthens legal accountability for price-related violations.
Police stopped sales; prices have rebounded in July, and poly future prices surged significantly, supported by favorable factors such as expected, higher possible simultaneous increases in downstream product prices.
Anita Zhu: In the medium term, it is believed that the combined effects of industry self-discipline and government anti-molition regulations will foster a healthier and more sustainable industry. In the long run, as one of the most effective and sustainable energy sources globally, solar power is expected to remain a key driver of the global energy transition and sustainable development. Looking ahead, DAQO NEW ENERGY's wealth positions capitalize on the long-term growth in the global solar PV industry and strengthen its competitive edge by enhancing its higher efficiency and technology and optimizing its cost structure through digital transformation and AI adoption.
For reference the 2569 contract, real sharply from a low of R&B 30 per kilogram in June 2025, to a record. High 55 R&B per kilogram in July 2025, the strongest level and solar PV industry continues to shift, strong long-term Prospect in the median term. We believe that the combined effect of Industry self, disappointment government entity, and the Lucian regulations will Foster a healthier and more sustainable industry and the long run as 1 of the most effective and sustainable energy sources globally, solar Powers expected to remain a key driver of the global energy transition and sustainable development.
Anita Zhu: As one of the world's lowest cost producers with the highest cost, highest quality entire product, a strong balance sheet with no financial debt, we're confident in our ability to weather the current market downturn, capitalize on market recovery, and emerge as a leader in the industry positioned to capture further growth. So now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.
Looking ahead, Daqo New Energy is well positioned to capitalize on the long-term growth in the global solar PV industry. Since that is a competitive edge, we are in the process of improving our higher efficiency technology and optimizing our cost structure through digital transformation and AI adoption. As one of the world's lowest cost producers with the highest quality anti-products, our strong balance sheet, with no financial debt, gives us confidence in our ability to weather the current market downturn, capitalize on the market recovery, and emerge as a leader in the energy sector, positioned to capture further growth.
So now, I'll turn the call over to our CFO, Mr. Met. We'll discuss the company financial performance for the quarter. Thank you. Go ahead.
Ming Yang: Thank you, Anita, and hello, everyone. This is Ming Yang, CFO of DAQO NEW ENERGY. We appreciate you joining our earnings conference call today. I will now go over the company's second quarter of 2025 financial performance. Revenues were 75.2 million compared to 123.9 million in the first quarter of 2025 and 219.9 million in the second quarter of 2025. The decrease in revenue compared to the first quarter of 2025 was primarily due to a decrease in sales volume. Gross loss was 81.4 million compared to 81.5 million in the first quarter of 2025 and 159 million in the second quarter of 2024. Gross margin was negative 108% compared to negative 65.8% in the first quarter of 2025 and negative 72% in the same quarter of 2024.
Thank you, Anita. And hello everyone. This is Ming Yang, CFO of Daqo New Energy.
We appreciate you joining our earnings conference call today.
I will now go over the company's second quarter 2025 financial performance.
Revenues were $75.2 million compared to $123.9 million in the first quarter of 2025 and $219.9 million in the second quarter of 2014.
The decreasing revenue compared to the first quarter of 2025 was primarily due to a decrease in Salesforce.
Both laws are $81.4 million compared to 81.25% of 2025 and the $159 million in the second.
2024.
Ming Yang: The decrease in gross margin compared to the first quarter of 2025 was primarily because sales volume decreased, while idle facility costs remain relatively fixed. MG&A expenses were 32.1 million compared to 35.1 million in the first quarter of 2025 and 37.5 million in the second quarter of 2024. MG&A expenses during the second quarter included 18.6 million in non-cash share-based compensation costs related to the company's share incentive plan, compared to 18.6 million in the first quarter of 2025. The decline in MG&A expenses in the second quarter compared to the first quarter is a result of lower staffing costs as well as lower sales expenses. R&D expenses were 0.8 million compared to 0.5 million in the first quarter of 2025 and 1.8 million in the same quarter of 2024. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter.
Close margin was negative, 108% compared to negative 65.8% in the first quarter of 2025 and negative 722% in the same quarter of 2024.
The decrease in growth margin compared to the first quarter of 2025 was primarily because sales volume decreased while I go facility costs remained relatively fixed.
CNA expenses were $32.1 million compared to $35.1 million in the first quarter of 2025.
And $37.5 million in the second quarter of 2024.
CNA expenses during the second quarter included $18.6 million in non-cash, share-based compensation costs related to the company's share incentive plan, compared to $18.6 million in the first quarter of 2025.
The client hna expenses.
And the second quarter compared to the first quarter shows a result of lower staffing costs, as well as lower sales expenses.
R&D expenses were $0.8 million, compared to $0.5 million in the first quarter of 2025 and $1.8 million in the same quarter of 2024.
Ming Yang: As a result, the foregoing loss on operations was 115 million compared to 114 million in the first quarter of 2025 and 195.6 million in the same quarter of 2024. Operating margin was negative 153% compared to negative 92% in the first quarter of 2025 and negative 89% in the same quarter of 2024. Net loss attributable to DAQO NEW ENERGY's stakeholders was 76.5 million compared to 71.8 million in the first quarter of 2025 and 119.8 million in the same quarter of 2024. Loss per basic ADS was $1.14 compared to $1.07 in the first quarter of 2025 and $1.81 in the second quarter of 2024. Adjusted net loss attributable to DAQO NEW ENERGY Corp shareholders, excluding non-cash share-based compensation costs, was 57.9 million compared to 53.2 million in the first quarter of 2025 and 98.8 million in the same quarter of 2024.
R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter.
As a result of the foregoing, the loss on operations was $115 million compared to $114 million in the first quarter of 2025 and $195.6 million in the fourth quarter of 2024.
Operating margin was negative 163%, compared to negative 92% in the first quarter of 2025 and negative 89% in the same quarter of 2024.
Net loss attributable to Aqua New Energy Corp shareholders was $76.5 million, compared to $71.8 million in the first quarter of 2025 and $119.8 million in the second quarter of 2024.
Loss per basic share was $1.114 compared to $1.70 in the first quarter of 2025 and $1.81 in the second quarter of 2024.
Ming Yang: Adjusted loss per basic ADS was 86 cents compared to 80 cents in the first quarter of 2025 and 50 cents in the same quarter of 2024. EBITDA was negative 48 million compared to negative 48.4 million in the first quarter of 2025 and negative 145 million in the second quarter of 2024. EBITDA margin was negative 64% compared to negative 39% in the first quarter of 2025 and negative 66% in the second quarter of 2024. Now on the company's financial condition. As of June 30th, 2025, the company had 599 million in cash, cash equivalents, and restricted cash compared to 792 million as of March 31st, 2025, and 998 million as of June 30th, 2024. As of June 30th, 2025, short-term investments were 418.8 million compared to 168 million as of March 31st, 2025, and 219.5 million as of June 30th, 2024.
Compared to 53.2 million in the first quarter of 2025 and 98.8 million in the same quarter of 2024.
Assisted loss for basic ads was $0.86 compared to $0.80 in the first quarter of 2025, and $0.50 in the same quarter of 2024.
If a dog was -$48 million compared to -$48.4 million in the first quarter of 2025 and a negative $145 million in the Supreme Court of 2024.
If the margin was negative 64% compared to negative 39% in the first quarter of 2025 and negative 66% in the second quarter of 2024, now on the company's financial condition.
As of June 30, 2025, the company has $599 million in cash, cash equivalents, and restricted cash.
Compared to 792 million as of March 31, 2025, and 9,998 million as of June 30, 2024.
Ming Yang: And as of June 30th, 2025, notes receivable balance was 49 million compared to 62.7 million as of March 31st, 2025, and 80.7 million as of June 30th, 2024. Notes receivable balance represent bank notes with maturity within six months. And as of June 30th, 2025, the balance of fixed-term deposits within one year was 960.7 million compared to 1.12 billion as of March 31st, 2025, and 1.17 billion as of June 30th, 2024. Now on the company's cash flows. For the six months ended June 30th, 2025, net cash used in operating activities was 105.4 million compared to 278.6 million in the first in the same period of 2024. And for the six months ended June 30th, 2025, net cash used in investing activities was 342.7 million compared to 1.7 billion in the same period of 2024.
As of June 30th, 2025 short-term Investments was 418.8 Million compared to 168 million as of March, 31st, 2025, and 219.5 million of June 30th 2024.
And as of June 30, 2025, the notes receivable balance was $49 million.
Compared to 62.7 million as of March 31, 2025, and 80.7 million as of June 30, 2024.
The notes receivable balance represents bank notes with a maturity within 6 months.
and as of June 30th, 2025, the balance of fixed-term deposits,
Within one year, it was $9,006.7 million compared to $1.12 billion as of March 31, 2025, and $1.17 billion as of June 30, 2024.
Now on the company's cash flows. So the 6 months ended June 36 30th 2025, net cash used in operating activities was 105.4 Million compared to 2766 278.6 million in the first in the same period of 2024.
Ming Yang: The net cash used in investing activities in the first half of 2025 includes 87.8 million in the purchase of PP&E and 255 million related to purchase of short-term investments and fixed-term deposits. And for the six months ended June 30th, 2025, net cash used in financing activities was 32,000 compared to 43 million in the same period of 2024. And that concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin.
And for the 6-month period ended June 30, 2025, net cash used in investing activities was $342.7 million compared to $1.7 billion in the same period of 2024.
The net cash used in investing activities in the first half of 2025 includes $87.8 million in the purchase of PP&E.
And $255 million related to the purchase of short-term investments and fixed-term deposits.
And for the six months ending June 30, 2025, net cash used in financing activities was $32,000 compared to $43 million in the same period of 2024.
And that concludes our Supermarket, we will now open the call to Q&A from the audience.
Operator. Please begin.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster. Our first question today will come from Alan Han of JP Morgan. Please go ahead.
Thank you. We will now begin the question-and-answer session.
To ask a question, you may press star and then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
If at any time your question has been addressed and you would like to withdraw your question.
Please press star and 2. At this time, we will pause momentarily to assemble our roster.
Our first question today.
Still coming from Alan Hahn of JP Morgan. Please go ahead.
Alan Han: Thank you for letting me ask the questions, Anita. I have two questions. The first one is on the policy development. I'm interested in sharing some columns on the latest development on the discussion on the consolidation front or other policy development right now. And number two is on poly prices. I understand like due to the pricing law, I mean the poly prices increased towards the 45 to 50 level. But at the same time, I mean the sequential demand supply and channel inventory is also increasing. So how should we think about like the poly price in the next three months? Thank you.
Uh, thank you for uh letting me to ask the questions management of 2 questions.
The first one is on the
uh, policy development.
On the discussions on the consolidation fund.
Or other policy development, uh, right now.
Prices. I understand that, due to the pricing law, prices increase for tourists to the $4,550 level. However, I mean the sequential demand and supply in the China industries.
So how should we think about the party price in the next three months? Thank you.
Xiang Xu: 你可以讲。你可以讲。你有那个。
Speaker 9: 有。我听了有NIG啊, 就。
Xiang Xu: 你等一下讲。
Speaker 9: 你先开始。我会讲, 继续。
Xiang Xu: 可以的。
Anita Zhu: Okay, thank you, Alan. So regarding the latest development in the industry, so on August 19th, the NIT, also the NDRC, along with the Ministry of Social Affairs and State Administration for Market Regulation and the National Energy Administration, they have jointly held a symposium on the solar PV industry. So during that meeting, a number of government officials, together with a number of solar PV manufacturers and the relevant power companies as well as the CCRA and relevant local industrial and information technology departments, they all attended the meeting. And basically, during the meeting, they have again reinforced that we have to curb the irrational competition of selling below cost. So first, we have to strengthen the industry regulation through strengthening the management of investment in the PV project and promote the gradual phasing out of outdated production capacity through market-oriented and law-based approaches.
Please.
Regarding the latest development industry. So, uh, um,
August 19th. The MIT, along with the NDRC and the Ministry of Social Affairs,
And State and Michigan Market regulation and, um, National energy Administration. We have joined the held a symposium on the solar PV industry. So during that meeting um the number of government officials together with a number of solar PV manufacturers and the 11 power companies, as well as the cpia and relevant, local industrial and information technology department. They all attended the meeting and basically, during the meeting, um, they have again reinforced that we have to curve the irrational composition of selling below costs. So first, we have to strengthen the industry regulation through, um, strengthening the the management of investment in the TV project and promote,
the gradual facing out of
Anita Zhu: And second of all, they aim to curb low prices in order to recompetition. So through improving the price monitoring and also the product pricing mechanism to track down irregular practices such as selling below cost. And lastly, to standardize the product quality, so combat practices such as reducing the boiling control or things like infringing IP rights. And I think during the meeting, the essence is to support the industry self-regulation and to gradually work towards forming this buyout SPV for acquiring outdated capacity in that industry. And regarding prices, it will really depend on how this buyout SPV will roll out because we're still under the progress of working out the details of such SPV. So it's hard for us right now to say exactly how prices will develop in the coming months.
outdated production capacity through Market oriented and, uh, Walgreens Brokers. And second of all,
They aim to curb low prices so through improving the price monitoring and also uh the the product pricing mechanism to crack down on irregular practices such as selling low cost.
And lastly, to standardize the idea of products, the product quality must come back to practices such as reducing the quality control or things like in printing IP rights.
And I think during the meeting, the essence is to support the industry's self-regulation.
Gradually work towards forming this. Buy out as PV.
For acquiring outdated capacity in the industry.
And regarding prices, it really depends. Um, how does this buyout STV?
Will roll out because we're still in the process of working out the details of such FTV. So it's hard for us right now to say exactly.
Anita Zhu: But I think, as we can see recently, prices have increased, especially in the futures market, in the expectation of rising prices. Also, if we look at the latest solar project that could work as a sign of the industry development, the China Guardian Corporation, they had a 20-gigawatt project. And from that, the market prices were around 71 RMB cents per watt to 75 RMB per watt. So it has really increased, and it's way above the floor prices for modules right now. And we believe that has passed through to the upstream poly sector. Now, I hope that answered your question.
How prices will develop in the coming months is still uncertain, but we can see that recently, prices have increased, especially in the futures market, in expectation of rising prices. Additionally, if we look at the latest solar projects, they could serve as a sign of industry development. For instance, the China Body and Corporation announced a 20 gigawatt project.
And from that, they modified this from around 71 R&D cents per watt to 785 R&D cents per watt. So it has really increased, and it's way above the floor prices for modules right now. We believe that has passed through to the upstream policy sector, so I hope that answers your question.
Alan Han: Thank you, Anita. That answered my question. And I'll pass it on. Thank you.
I apologize. Thank you.
Ming Yang: Great. Thank you, Alan.
Great. Thank you.
Xiang Xu: Oh, what is it?
Operator: Our next question today will come from Trilep Chen of Roth Capital Partners. Please go ahead.
Our next question today will come from Chilip Chen of Roth Capital Partners. Please go ahead.
Matt Ingram: Hi, this is Matt Ingram on for Phil. Thank you for taking our questions. Kind of following up on the on the past question is, you know, how sustainable do you think that, you know, higher pricing can be when with the anti-involution initiatives? And secondly, you know, what's your outlook for, you know, industry production volumes? And when would you expect to see, you know, the inventory levels be healthy again?
Hi. This is Matt Ingram on for Phil. Thank you. Uh for taking our questions, kind of following up on the on the past. Question is you know how sustainable do you think that you know, higher pricing can be when
With the anti-inflation initiatives and secondly, you know, what's your outlook for, you know, industry production volumes and um, when would you expect to see you know, the in inventory levels be healthy again?
Ming Yang: Give us a minute. We're going to translate for Mr. Xu.
Give us a minute. We're going to translate for Mr.
Xiang Xu: 来, 讲。
Speaker 11: 因为本来讲我是觉得这个价格, 你不会自己限制成本出来的。价格可以自己承担的, 是可能的。因为这违反这个, 这个, 这个应该讲我们不能做违法或者违纪的事情, 对吧? 你自己打了一个规定, 行不行? 我们不能做这个。
Today.
Chaka.
7.
Anita Zhu: Okay. So first of all, I think one thing that's clear is that there has been consensus that selling below cash costs is unsustainable and very detrimental to the overall industry development. And in our view, that's disruptive to the healthy development of the industry and hence poses legal risks, and hence we won't be, or we would be enforcing the regulations and the laws. And we think that all the industry players are on the same page regarding that. And in terms of production volume, I think going forward in the next couple of months, it will be around 100,000 metric tons to around 110,000 metric tons, relatively balanced with demand.
Okay. So, first of all, I think one thing that's clear is that, um, there has been consensus that selling below cash cost is unsustainable and very detrimental to the overall industry development.
and in our view, that is disruptive to the healthy development of the industry and hence
Post illegal risks. And as we won't be, we would be unfortunately, the regulations and the loss. And we think that all the industries.
All the industry players are on the same page regarding that.
And in terms of production volume, I think going forward in the next couple of months, they will be around 100.
100. 100 100.
Uh, 100,000 metric tons to around 1, 10,000 metric tons relatively.
Ming Yang: Per month?
Anita Zhu: Per month.
Balanced with demand.
Per month per month.
Matt Ingram: Okay. Thank you. And then, you kind of talked about, you know, potentially in the past, like acquiring surplus production capacity. Is there an update on that strategy? And do you think we could see anything in the near term?
Okay, thank you. And then, um, you kind of talked about, you know, potentially, in the past, acquiring surplus production capacity. Is there an update on that strategy, and do you think we could see anything in the near term?
Anita Zhu: Yes. I think, we're still under, first of all, we're still under progress for the SPV, and I think the whole picture will become more clear in the coming weeks or the coming months. But all the industry players, as well as the power companies and the relevant, regulators are all working hard toward coming to a consensus because that would be very remarkable for the industry and could set the tone for for similar industries in China, such as EV and also lithium batteries. I think they're starting with, solar PV, which is why they have mentioned about solar PV in the news article by People's Daily on June 30th. So, we're all working very hard towards coming to a result. And we are quite optimistic about that because that's what the industry should be, and that's good for the overall, development of the industry.
Uh yes I think uh we're still on the first of all, we're still in progress for the TV and I think the whole picture will become more clear in the coming weeks or the coming months but all the energy players as well as the power company is and the relevant. Uh regular Regulators are all working.
hard towards coming to a consensus because that would be very remarkable for the industry and could set the tone for.
For similar Industries in China, such as EB and also lithium batteries. I think they're starting with, uh, solar PV, which is why they are mentioned about solar PV and the news article by people's daily on June 30th. So, uh, we are all working, very hard to work coming to a resolve
and we are quite optimistic about that because that's
That's what the industry should be, and that's good for the overall development.
Anita Zhu: Because right now, selling below cash costs, first of all, none of the companies are making a profit. And second of all, internationally, they have been viewing China or accusing China of anti-dumping, and that's not something that we want to see as a whole.
Of the, uh, energy because right now our selling oil cast off. First of all, none of the companies are making a profit, and second of all, internationally, they have been viewing China or accusing China of anti-dumping. And that's not something that we want to see as a whole.
Matt Ingram: Thank you. I'll pass it on.
Ming Yang: Great. Thanks, Matt.
Thank you. I'll pass it on.
Great. Thanks, man.
Operator: Our next question today will come from Alan Yong of Jefferies. Please go ahead.
Our next question today will come from Allen. Y'all of Jeffrey's. Please go ahead.
Alan Han: Thanks a lot for taking my question. Our question is about the buyback the company just announced. So it's showing that the company has approved 100 million of share repurchase program. I wonder if what's the thinking behind that and also what's the timeline in the buyback?
And have a look for taking a question. Um our question is um about the um uh buyback uh the company just announced. So I saw that the um company has approved 100 million of ship purchase program wonder if uh what's the thinking behind that? And also, what's the timeline in uh the buyback?
Anita Zhu: Yeah. Thank you, Alan. So we actually just authorized this new share repurchase program today of in the amount of 100 million US dollars until the end of next year. And the logic behind this is that we are optimistic about the future of the industry, and we believe we could see a turning point soon. I believe in previously, our valuable shareholders have been wondering when will we want to start the share repurchase. And the reason why we were hesitant about it is because we believe if we just rely on the market to rebalance supply and demand, it will take a relatively long time of approximately two to three years, given how strong and all the companies who have expanded their capacity this round are.
Yeah, thank you, Alan. So we actually just authorized this new share repurchase program today of...
In the amount of, uh, $100 million and still the end of next year. And, uh, the logic behind this is that we are optimistic about the future of the industry. And we believe we will see a turning point soon. I believe, previously, our valuable shareholders have been wondering when we will want to start the share repurchase.
The reason why we were hesitant about it is that we believe we can just rely on the market to rebalance. The point in demand will take a relatively long time of approximately 2 to 3 years given how.
Strong. And
Anita Zhu: However, we believe that because we are on the same page towards promoting the healthy development of the industry, and hence we are more optimistic about the future or the outlook of the entire industry. And we believe that we want to strengthen the confidence of our shareholders as well, and that's aligned with our overall strategy. And in terms of the overall pace of the share repurchase program, I think that would also be contingent upon the market development. But that's definitely the first move we're working towards, strengthening the confidence in the market.
Uh, all the companies that have expanded their capacity this round are. However, we believe that because we are on the same page toward promoting healthy developers and the industry, we...
But that's definitely the first move. We're working towards strengthening confidence in the market.
Alan Han: I see. That's very clear. Even that the stock price of the A share is actually above the ideal price already. So will share price or shareholding reduction on the A share to fund further buyback in US be back on the table again?
I see that's for today. Um,
Even that's it. Um, the stock price of Daqo New Energy Corp. is actually above the IPO price already, so well, um,
Share price, uh or shareholding reduction on the Asia to fund for the buy back in uh USB back on the table again.
Anita Zhu: Yes. I think that's definitely a consideration given that we have been trading above the IPO issue price, right? Right now, it should be around 30 RMB. And yeah, that's definitely on the table, and we'll consider that. But I think how we want to start this program first is the remaining cash on our list goals right now because previously, we still have a meaningful amount on the list goals. So we will start with that allocation first. But selling our A share to repurchase on the US is definitely back on the table.
Uh, yes, I think that's definitely a consideration given that we have been trading above the IPO issue price right now. It should be around $30 on, please. And, um, yeah, that took me on the table and we'll consider that. But I think how we want to start this program versus the remaining cash on our... uh, let's go right now because previously we still have a meaningful amount on the list goes. So we will start with.
That allocation first, but selling on issue to repurchase on the U.S. and stuff it back on the table.
Alan Han: Interesting. And following the question from Alan and also Philip on the consolidation initiative. So how do you see yourself in terms of the end game, like the amount of volume you will be able to produce? For example, now your guidance is around 110 and 130 thousand of metric tons for the production volume of this year. If the consolidation effort is successful, what would you think will be your production volume going forward?
That's right. And, uh, following the question from, um, Ellen. And also Philip, um, on the consolidation, uh, initiative. So how do you see yourself, uh, in terms of, uh, the end game like, um, the amount of volume you will be able to produce for example? Now, your guidance is around 110 and 130 uh uh, thousand of microns uh for for the discussion volume of this year.
If the consolidation effort is successful, what would you think? Um, will your production volume go forward?
Anita Zhu: I think that depends on a couple of things. Okay. So if we calculate the amount of overall capacity that's built or in the process of being built, that will be around 3.5 million metric tons at least. And the production volume of how much we can produce per year really depends on how much capacity is still remaining in the market and the overall demand per year, right? Because I think the fundamentals behind this action is that the supply would meet the demand per year from now on. So I believe that going forward, all the companies will reduce their utilization rates or operate at a utilization rate that would match the demand. So it won't be 100% at least in the coming years.
Uh, I think that depends on a couple of things, because if we calculate the amount of overall capacity that's built.
Uh, in the process of the film builds that will be around 3.5 million metric tons and leads. And
Depending on the production volume of how much we have produced per year, we really depend on how much capacity is still remaining in the market and the overall demand per year, right? Because I think the fundamentals behind this.
Uh, this action is that the supply would meet the band per year from now on, so none. I believe that going forward all the companies.
They will reduce their utilization rate or operate at a utilization rate that would match the demand, so it won't be 100%, at least in the coming years.
Alan Han: I see. So thanks a lot. I'll pass it on. Thank you.
I,
I will pass on. Thank you.
Ming Yang: Great. Thanks, Alan.
Great. Thanks. Colin.
Operator: Our next question today will come from Mengwen Wang of Goldman Sachs. Please go ahead.
Our next question today will come from Manguin Wong of Goldman Sachs. Please go ahead.
Xiang Xu: Hi. Thank you, management, for taking my question. I have two questions, mainly related to the poly price outlook. So first, do we have any color on the benchmark production cost to derive the policy-regulated pricing? Because I know there's a lot of news coming in to talk about the selling price should not be under the production cost. But do we have any more colors on the definition of the production cost? And secondly, as we mentioned, like the we have been doing well in terms of to sustain the poly price hike. And as a result, our shipment volume declined a bit. So going forward, how do we see how do we balance the price and inventory dynamic? Yeah, that's my question. Thanks.
Um, hi, thank you management for taking my classroom. Um, I have 2 questions mainly related to the poly Parts Outlook. So um, first, um like uh do do, do we have any color? Um um The Benchmark production cost to derive, the policy regulated pricing? Um because uh, I don't know, there's a lot of news coming in to talk about. Um, the selling price should not be, um, under the production cost. But um, do we have any um, more colors on the definition of the production cost?
And secondly, as we mentioned like the, um, we have been doing well in terms of to, um, to sustain the poly price hike and as a result, our shipment volume declined a bit. So going forward, how do we see do? Uh, how do we, um, balance the, uh, price, and and inventory? Um, the dynamic? Yeah, that's my question, thanks.
Ming Yang: Okay. Thanks, Mang, for your question. So our view is that the industry will need to sell at a price above the industry production cost. And our understanding is the industry overall, I would say the average quote-unquote "production cost" is probably in the mid-40-ish range. So our view is that, you know, because of the Chinese laws and the government policy, that's kind of that will be the minimum poly pricing that the industry players will be required to sell to its customers. And I think if you look at the most recent, I think both transactional pricing as well as futures pricing, right, in the high kind of the high 40s to the low 50s. So that is reflective of this new government policy that requires the industry players to sell above production costs. So that is our poly price outlook going forward.
Okay, thanks, Mo, for your question. So, our view is that...
Uh, above, uh, the industry production cost.
And understanding is the industry overall.
Uh uh I I would say the the the average cuanto production cost probably in the in the mid 40-ish.
Range.
So, our view is that, you know, because of the Chinese laws and the...
Uh, the government policy is that that's kind of, that will be the, the minimum poly pricing that, uh, the the industry players will be required to sell. So, uh, to its customers and I think, if you look at the the most recent, uh, I think both transactional pricing, as well as, uh, a futuristic pricing right in the high kind of the high 40s to to the low 50s. But so that is reflective of this uh, new government policy. That requires the industry players to sell Above production cost.
So, so that is our poly price going forward.
Xiang Xu: Yes, please follow up the question. If the poly price stays at around 50 RMB per kilo, and if we do our product low sales, like we keep piling up our inventory, so how do we see how to what's our strategy in terms of this kind of situations?
Uh yes to follow up the um, the question uh if the policy price stay at around 50, then maybe per kilo and if, uh, we don't our product don't sell.
Like we keep piling up our inventory and so on. How do we, um, uh, see how to, um, like, uh, what's our strategy in terms of this kind of situations?
Ming Yang: I think there will be industry policies and perhaps government policies for by the government, but that will require industry supply to balance with industry demand, right? Right. So let's say, and just making assumptions, right, if industry demand, say, is 1.2 million tons per year in 100,000 tons per month, then the industry sales and the annual production will, you know, be consistent with that kind of demand levels. It will be adjusted so that poly pricing can be maintained at the production costs or above level.
I think there will be industry policy.
Perhaps government policy.
For by the government.
And I will.
We require industry supply to balance with industry demand.
Right, right. So, uh, let's say, just making assumptions, right? If we consider industries, 1.2 million tons per year is equivalent to 100,000 tons.
Per month. And then the industry sales and annual production will, you know, be.
uh, consistent with that kind of demand levels, but it will be just so that.
Anita Zhu: And to follow up on your question on inventory, I think for a big picture, right, if people want to manage their inventory, I think the direction is to manage the utilization rates of the companies so that it will not be over-demand going forward. And for us, we will really have to wait to see how the regulation unfolds in the next coming weeks or the next coming months, then before we can decide what our strategy will be. And also to add on, I know there are companies who are participating in the futures market. We've also participated a meaningful amount in the futures market just to hedge against risks and to advertise as a strategy.
Uh, poly pricing can be maintained that, uh, the production costs are above level.
And and to to to follow up on your question on image way. I think for uh a big picture, right? People want to manage their inventory. I think the the direction is to manage the utilization rates of the companies, so that it will not be over demand going forward. And for us, we will really have to wait
To see how the regulation of growth in the next coming weeks or the next coming month.
That before we can decide what our strategy will be. And also to add on, I know there are companies who are participating in the futures market. We've also participated a meaningful amount in the futures market just to hedge against risks and to serve as a strategy.
Xiang Xu: Yeah. Thanks, Ian. And thanks, Anita. That's really clear. So to sum up, we are expecting some kind of policy to help the industry cut production into September. And we have actively engaged in the poly future market in order to mitigate the volatility of the poly price, right?
Yeah. Thanks uh, Ian and the thanks, Anita. That's really clear. So, uh, so to sum up, we are expecting some kind of policy to help the industry cut production into September and we have actively uh engaged in the policy and future Market in order to to uh to to mitigate the volatility of the policy code Price Rite.
Anita Zhu: I mean, we were registered as the first batch of the companies who are allowed to sell in the futures market. But strategy-wise, we're really dependent on how the regulations will come out and, yeah, and how the stock prices will move.
Uh, we, I mean, we were registered as the first batch of companies who are allowed to sell the futures market, but
The strategy-wise or really depends.
How the regulations will come out.
and,
Yeah, and how the stock prices will move.
Xiang Xu: Yeah, sure. How about the policy timeline? Is that a shall we expect any meaningful policy kicking into September?
Sure. Uh, how about the policy timeline? Is that, uh, shall we expect any meaningful policy kicking in for customers?
Anita Zhu: We are working towards on all of the related parties, including the CPIA, the manufacturers, and the related regulators are working very diligently towards a result coming out from the continuous meetings. However, we cannot guarantee, but we believe that because everyone is on the same page.We
Uh, we are working towards all of...
related parties, including the CPI, the manufacturers.
And the related regulators are working very diligently towards a result coming out for, um, the continuous meetings.
Jessie Zhao: are working towards a result or a proposal coming out.
But we believe that because everyone is on the same page, we are working towards.
A.
A result or a proposal coming out.
Operator: Yeah, sure. That's all my questions. I will pass it on. Thank you.
Ming Yang: Great. Thank you, Moen.
Yeah, sure, that's all for my question. I will pass it on. Thank you.
Okay, thank you, more.
Operator: The next question today will come from Qi Wei Hou of CICC. Please go ahead with your question.
The next question today will come from Chihuahua uh cicc, please go ahead with your question.
Anita Zhu: Yes, this is...
Xiang Xu: Sales management. This is Xiang Xu from CICC. And my first question is, I saw you lower the sales volume for the second quarter. So how's the plan on it? And what's the plan for utilization rate in the future? And my second question is, I saw you reduce the production cost besides the reduced cash cost. So what other ways are there to reduce the cost? Thank you.
Perfect management. My first question is, I noticed you lowered the sales volume for the second quarter. So how's the planning going?
And what's the plan for utilization rates in the future? And my second question is, I find you have reduced the production cost, alongside the reduced cash cost. So what other ways are there to reduce the cost? Thank you.
Jessie Zhao: Hi, thank you, Xiang Xu. So I think for the first question, the reason why the sales volume is meaningfully below the production volume is because prices are really trading at a very low level and below the cash cost level. And as we are working towards or working out a proposal since I think the first meeting that was hosted and hosted by MIT and DRC were happening in the second quarter. So we were waiting to see how the policies will shift or how much capacity will phase out in the future so that we can adjust our sales strategy accordingly. And we believe that, once the regulations come out, if any, then, we will try to maintain our inventory at a healthy level.
Hi, thank you for playing. So I think for the first question, the reason why the cell volume is meaningfully below the production volumes is because.
Prices are really trading at a very low level and are full of cost pressures. As we are working...
Towards or working out a proposal since and the first meeting that will hosted and a hosted by MIT ndrc or happening in the second quarter. So, we were waiting to see how the policies will shift or how much capacity will phase out in the future so that we can adjust our sales strategy accordingly.
and we believe that, once the regulations come out,
If any, then we will try to maintain our inventory at a healthy level.
Ming Yang: No, I'll follow up. So regarding utilization rate, so I think we're maintaining the 30 to 35 percent utilization rate. I think it will be subject to, for example, demand environment and pricing, as well as the industry consensus or industry self-discipline in terms of supply and production. So it will be a balance of those decisions. But I think currently we're maintaining the 30 to 35 percent utilization rate for now and then monitoring industry status and progress. In terms of production cost, I think for Q2 it is slightly lower than Q1. I think it's helped by both the improvements in manufacturing efficiency and, for example, lower energy usage. So it is lower in the energy usage and little cost. And currently, we're expecting the cost trend to continue to improve for Q3 as well.
No. Uh, I'll pull up to regarding your utilization rate. So, I think we're maintaining the 32% to 35%.
Utilization rate, I think it'll be.
Um subject to for example, demand environment and pricing as well as the industry, a consensus or industry self-discipline in terms of supply and production. So so you'll be a
A balance of those, uh, the decisions but but I think currently we're maintaining the, the 3235 division rate for now on a monitoring uh industry and status and progress in terms of production costs. Uh, I think for Q2 it is a slightly lower than
Q1. I think it's helped by both the improvements in manufacturing and efficiency and and for example, lower but energy uses as well as lower cost. And currently, we're expecting the cost run to continue to improve.
Ming Yang: So, for example, our current cash cost is approximately, say, $5 per kilogram right now, I think based on the current source of metal cost, which is already lower than our Q2 2025 cost. So that's the current cost status for the company.
For Q3 as well. So, so so for example, uh, uh, our current cash cost is just approximately say 5 dollars per kilogram right now. I think based on the current. So it's a metal cost, which is already lower than our, our
To.
2025 cost.
So, that's the current cost status for the company.
Xiang Xu: Okay. All very clear. So that's all my questions. Thank you.
Ming Yang: Okay. Thank you, Xiang Xu.
Okay. Oh, very clear. So that's on my question. Thank you.
Goodbye.
Operator: Our next question will come from Gordon Johnson of GLJ Research. Please go ahead.
Our next question will come from Gordon Johnson.
Of glj research. Please go ahead.
Ming Yang: Hey, guys. Thanks for taking the questions. So I guess my first question is, it seems like you guys explicitly said you intentionally held back polysilicon cells in the second quarter. So can we conclude from that that you'll sell more in the third quarter? If you could provide some color there. And then from my calculations, it seems like you're guiding production to increase from 26,000 metric tons at the midpoint in Q2 to 28.5 in Q3 and then 40.7 in Q4. Should we take from that you intend to sell significantly more polysilicon in Q4? And then I have a follow-up. Thank you.
Hey guys. Thanks for taking the questions. Um, so I guess my first question is, it seems like you guys explicitly said you intentionally held back polysilicon cells in the second quarter.
More polysilicon and Q4, and then I have a follow-up. Thank you.
Jessie Zhao: Okay. Thank you, Gordon. So first of all, I think the reason why we held back or sold relatively a lot lower than our actual production volume was because it was trading at below cash cost. And as we don't want to disrupt the overall, the industry dynamics, or I should say as the industry has guided that, we should not be selling below, the production cost. We have adjusted our sales strategy accordingly. And going forward in the third quarter, as you have, you might have seen recently that prices have ticked up. And we believe, if it's not cutting below our our cost, then it makes sense for us to start selling. And like I said before, I I think it would really depend on, when and how the regulations will come out.
Okay, thank you, Gordon. So, first of all, I think
So, uh, relatively a lot lower than our actual production volume was because it was trading at the lowest cost. And as we...
Still want to disrupt the overall, uh, the industry dynamics, or I should say, as the industry has guided that we should not be selling below.
Uh the production cost we have adjusted our sales strategy accordingly and going forward in the third quarter as you have you might have seen recently that prices have picked up and we believe um if it's not cutting below our our cost and it's
It makes sense for us to start selling.
Jessie Zhao: Then we would adjust our sales strategies accordingly in the remaining days in the third quarter, as well as going forward into the fourth quarter.
And like I said before, I think it would really depend on when and how the regulations will come out.
Then we will adjust our sales strategies accordingly in the remaining days of the third quarter, as well as going forward into the fourth quarter.
Ming Yang: Okay. That's helpful. And then if I think about, you guys said that transactions and the futures market is around, the high 40s, low 50s. based on my calculation, that would suggest a price of around $7.70 for polysilicon USD. yet your ASP in Q2 was, you know, 419. So I understand you don't have great visibility, it seems like, on what you're going to sell in Q3 until policy is decided. But are you transacting at that price that you highlighted, the high 49s/low 50s levels right now? Thank you for the questions.
Okay, that's helpful. And then if I think about... you guys said that transactions in the Futures Market are around the high 40s, low 50s.
Based on my calculation that would suggest the price of around $7.70 uh for poly, silicon USD. Um, your ASP um, in in Q2 was, you know, 419. So I, I understand you don't have great visibility. It seems like on what you're going to sell in Q3 until policy is decided. But are you transacting at that? That price that you highlighted. The high, the high 49s slash 50s levels right now. Thank you for the questions.
Ming Yang: Gordon, so I think that there's two specific goals that the company is trying to achieve, right? So one is based on the, and I think the government policies and the new laws. So I think we will sell at above our production cost for sure. And I think the levels indicated are representative of the market current transactional cost. And also, one of our another of our company's sales operation goal is to significantly reduce our inventory at hand as well, given the current market dynamic and environment. We're developing to do that. So we will try our best to do that. And I guess one clarification regarding pricing is the R&B price that we quote actually includes a 13% VAT. Okay. So I think you have to divide by 1.13 to get to the actual selling price, ex-VAT.
So, I think that there's 2 specific goals that the company is trying to achieve, right? So 1 is, uh, based on the, uh, uh, uh, I, I think the government policies and the new laws. So, so I think we worked our below above our production cost.
For sure. And I think the levels indicated are representative of the market current.
Uh, transactional cost.
and also one of our, another of our
Companies are still operational. Our goal is to significantly reduce our inventory.
At hand.
As well, given the current market dynamic environment.
To do that.
We will try our best.
To do that, and I guess 1 clarity regarding pricing is, uh, the R&B price that we call actually includes a 13%.
Ming Yang: Because that's right now, it's roughly maybe $5.80 to this range or something like that.
Vat. Okay so so I think you have to divide by 1.8 uh 1 3 to get to the actual uh uh a selling price uh expect to be at cuz that's a random roughly maybe 5,880 to the range, something like that.
Ming Yang: All right. So I mean, does that mean you guys will be gross margin positive in Q3? Thank you.
Right. So, I mean, does that mean you guys will be gross margin positive in Q3? Thank you.
Ming Yang: Let me just conclude that we expect to be cash. What's the word? Generating cash from our sales. Because there's a lot of, I guess, non-cash depreciation costs related to our idle facility because we're only running a one-third utilization. Yeah. But I think if you remove the non-cash depreciation, I think we're going to generate positive cash margin from sales.
Uh, let let me, let me just conclude that that we we, we expect to be cash. Uh,
Generating cash from our sales because there's a lot of, uh, uh, uh, I guess non-cash depreciation costs.
Related to our Idol facility, we are only running at one-third capacity.
Uh, twice a day.
Yeah, but I think if you remove the non-cash depreciation, I think we're going to generate positive.
Ming Yang: Very helpful. Thank you. Thank you.
Cash margin.
Ming Yang: Okay. Good. Thanks, Gordon. Thank you.
Very helpful. Thank you. Thank you.
Okay, good. Thanks, Gordon. Thank you.
Operator: This will conclude our question and answer session. At this time, I'd like to turn the conference back over to Jessie Zhao for any closing remarks.
This will conclude our question-and-answer session.
At this time, I'd like to turn the conference back over to Jessie Zhao for any closing remarks.
Jessie Zhao: Thank you, everyone, again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye.
Operator: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.
The conference is now concluded. Thank you for attending today's presentation.
And you may now disconnect your lines.