Polysilicon Supplier GCL-Poly Warns its Shareholders of Huge Losses in 1H 2020

Losses expected to be to the tune of $217 million

September 3, 2020


GCL-Poly Energy Holdings Limited, one of the largest suppliers of polysilicon to the solar market globally, warned its shareholders to expect losses to the tune of RMB 1.5 billion (~$217 million) in the first half of 2020.

Total net loss for the first half of 2020 (unaudited) was RMB 1,924 million (~$281.8 million). In the corresponding period last year, the company sustained a net loss of approximately RMB 751.4 million (~$109 million), implying a steep spike of 156% this year. The manufacturer incurred losses in the solar material business (polysilicon and wafers) to the tune of RMB 2,023 million ($296.2 million).

According to its board of directors, the losses shot up due to impairment on assets; decrease in aggregate capacity of the group’s solar power projects as a result of the disposal of subsidiaries; the decline in the sales of wafers; and the exchange loss caused by the appreciation of the dollar against RMB for dollar-denominated indebtedness.

In the first half of 2020, part of the annual production capacity of rod silicon of the group’s Xuzhou base switched to that of 30,000 MT (Metric Ton) of granular silicon, resulting in a decrease in production capacity of rod silicon from 70,000 MT to 36,000 MT for the period.

As of June 30, 2020, the production capacity of granular silicon was 6,000 MT.

The group produced roughly 17,881 MT of rod silicon in the first half of 2020 – a decrease of 51.1% as compared to 36,592 MT for the corresponding period in 2019. The decline in production was mainly due to the deconsolidation of Xinjiang GCL as a result of the disposal of 31.5% equity interest in the fourth quarter last year.

According to an analysis by American investment banking firm, Roth Capital Partners, GCL may be able to partially restart the production of the 50,000 MT taken offline by the July accident by October. It could be well into 2021 before all capacity is fully ramped back up. On July 19, 2020, a flash explosion occurred in the distillation unit of Xinjiang GCL. Considering the demand for polysilicon expected to rebound in the second half of 20 and strong growth anticipated in 2021, Roth expects poly prices to remain high.

Mercom had earlier reported that prices of polysilicon, an essential raw material for solar photovoltaic cells, are expected to climb higher following an explosion at GCL’s Xinjiang production facility. The blast took around 10% of the global production capacity offline.

Mercom’s data (June 2020) suggests that the average monthly polysilicon spot prices in China and Taiwan dropped around 26% over the last year.

According to Mercom’s India Solar EXIM Tracker, China was the largest exporter of solar modules and cells to India in the calendar year 2019, with a market share of nearly 78%.