INDUSTRY BRIEF: Daqo, Tongwei promise to scale back polysilicon production

Two of China’s leading producers of polysilicon, a key material used to make solar panels, have promised to scale back their production to ease an industry glut. Daqo New Energy Corp. (DQ.US; 688303.SH) and Tongwei Co. Ltd. (600438.SH) said on Tuesday they would “carry out orderly production cuts,” financial media Caixin reported.

Both companies acknowledged the cuts would hurt their sales over the short term, but added they would help to reduce their operating losses. Tongwei and Daqo are China’s largest and third-largest polysilicon makers, respectively. They and their rivals added huge amounts of new capacity in the last two years as demand for solar power boomed. But the resulting glut has caused polysilicon prices to plunge and sent many companies into the red.

When it released its third-quarter results in late October, Daqo said it had already cut its utilization rate to 50% of its installed capacity. It added the industry’s main trade group, the China Photovoltaic Industry Association, held a meeting on Oct. 14 where it called on everyone to “strengthen self-discipline and reduce unbridled competition.”

By Doug Young

To subscribe to Bamboo Works weekly free newsletter, click here