Goldman Sachs: Polysilicon shipments rose in the third quarter, but prices remained weak; fourth-quarter sales expected to fall

Why did higher third-quarter shipments fail to eliminate losses?

Daqo New Energy shipped 47 thousand tonnes in the third quarter, roughly twice the previous quarter’s volume and above Goldman Sachs’ earlier estimate of 15 thousand tonnes. But its average selling price rose only 2% quarter on quarter, and it continued to lose money per unit, so higher shipments actually widened its net loss.
Daqo New Energy reported revenue of 194 million dollars and a net loss of 53 million dollars for the quarter; Goldman Sachs had forecast revenue of 62 million dollars and a net loss of 32 million dollars.
Management said the surge in shipments mainly reflected the fulfillment of old orders signed before the recent price increase; trading activity was subdued after prices rose in early August.

Goldman Sachs said A-share-listed Daqo Energy and Tongwei delivered better results than the bank expected, mainly benefiting from lower unit costs and higher inventory impairment reversals driven by increased shipments.
Excluding impairment reversals, Goldman Sachs estimates that Daqo Energy’s third-quarter gross margin fell to -42% from -16% in the previous quarter, while Tongwei’s fell to -2% from 3%; both were still better than the bank’s previous forecasts of -70% and -4%, respectively.
Goldman Sachs estimates that Tongwei shipped approximately 80 thousand tonnes of polysilicon in the third quarter, above its earlier forecast of 28 thousand tonnes.

Daqo’s management expects output of 35 thousand to 45 thousand tonnes in the fourth quarter of 2026, corresponding to capacity utilization of 46% to 59%. Goldman Sachs believes this level of production cuts falls short of some industry targets.
Management said price enforcement remains under discussion, and companies have yet to reach a consensus on joint production cuts, with each adjusting operations to its inventory and sales needs. Management estimates supply-chain inventories at approximately 700 thousand tonnes and says it will take several months for prices to return to the full-cost level of around 43 yuan per kilogram.
Goldman Sachs expects fourth-quarter shipments by the polysilicon companies it covers to fall approximately 30% quarter on quarter, with average selling prices roughly unchanged.

Reflecting higher third-quarter shipments and impairment reversals, Goldman Sachs lowered its forecast 2026 net losses for Daqo New Energy, Daqo Energy and Tongwei by an average of 16%, while leaving its forecasts for 2027 to 2030 largely unchanged.
Goldman Sachs raised its price targets for the three companies from 10 dollars, 7.6 yuan and 4.2 yuan to 10.1 dollars, 7.8 yuan and 4.4 yuan, respectively, and reiterated its sell ratings.
The bank believes the industry is oversupplied and that the companies’ valuations already price in excessive expectations of polysilicon price increases; the earnings outlook could improve if major capacity exits the market or photovoltaic demand exceeds expectations.