Polysilicon giant OCI: Q3 revenue and profits plummeted

OCI Chemicals' polysilicon production unit's strong quarter-end shipments in the third quarter of 2011 also failed to give the company a breathing space, and revenue and profits plummeted.

Revenue from the polysilicon sector fell from 572 billion won (approximately 500 million U.S. dollars) in the second quarter to 449 billion won (445 million U.S. dollars).

According to the company, profits fell from 50% in the second quarter to 36% in the third quarter.

The apparent overcapacity in the entire PV industry supply chain is the main reason why prices have plummeted and the profits of many midstream companies have been squeezed.

OCI management hopes that this overcapacity can reach a balance between supply and demand during the 12 to 18 months or 30 GW of terminal market demand.

The company acknowledges that the entire industry is facing an even worse economic environment in the next two quarters than in the third quarter of 2011.

OCI stated that due to the continued weakness in industry demand, customers prefer high-quality (10N+) polysilicon, which greatly enhances OCI shipments and clears inventory.

The continued decline in prices has not been surprising. OCI pointed out that they are looking forward to further industry consolidation, especially for high-cost and small-scale enterprises.

OCI also stated that it will launch 7,000 tons of new production capacity after the new facilities in November eliminated the weak link, which will further reduce production costs.