(Yicai) Dec. 14 -- Shares of Daqo New Energy rose after the Chinese polysilicon supplier said it plans to hike its production capacity of the high-purity silicon material, even though the photovoltaic industry has been facing overcapacity pressures since the beginning of the year.

Daqo [SHA: 688303] closed up 0.6 percent at CNY28.49 (USD3.97) as of 1.50 p.m. in Shanghai today, after earlier gaining as much as 2.2 percent, while the Shanghai Composite Index dropped 0.1 percent. The firm's stock has plunged about 47 percent from its peak in November last year to the lowest since its listing in July 2021 because of falling polysilicon prices.

Daqo will build a new high-purity polycrystalline silicon plant in the Shihezi Economic and Technological Development Zone in Xinjiang Uygur Autonomous Region in two phases, each with an annual production capacity of 50,000 tons of high-purity polysilicon, the Shihezi-based company announced late yesterday.

The fixed asset investment of the new plant is expected to reach CNY15 billion (USD2.1 billion), Daqo added, without disclosing any further details.

The project will improve the firm's production capacity of high-purity polysilicon products and enhance its comprehensive competitiveness and profitability, Daqo pointed out, without addressing why the project will be built in a period of overcapacity in the industry.

It is worth noting that Daqo announced at the end of October that it would postpone the construction of the 100,000-ton second phase of its polysilicon plant in Inner Mongolia Autonomous Region to the second quarter of next year from the end of this year, partly because of the market environment.

In the third quarter of the year, Daqo's operating revenue fell 48 percent to CNY12.9 billion, and its net profit plunged 66 percent to CNY5.1 billion (USD711 million) from a year earlier, mainly because of the dramatic drop in silicon material prices since November last year. The company's polysilicon production and sales volume totaled 136,800 tons and 140,100 tons, respectively, in the three months ended Sept. 30.

Daqo's annual polysilicon production capacity rose to 205,000 tons as of June 30, as new capacities came on stream.

Editor: Futura Costaglione