(Yicai) Jan. 23 -- GCL Technology reduced the production cost of granular silicon, a key raw material used in solar panels, by 15 percent in the fourth quarter last year from the previous quarter to the lowest among its main competitors, putting the Chinese photovoltaic materials giant on track to achieve a turnaround in its performance this year.

It now costs GCL CNY28.17 (USD3.87) to produce one kilogram of granular silicon, which includes research and development expenses, the Suzhou-based company said yesterday.

By contrast, rival Xinjiang Daqo New Energy’s polysilicon production cost in the third quarter last year was CNY38.93 (USD5.35) per kg, down from CNY40.16 per kg in the second quarter, according to the Shihezi-based firm’s financial report. And in the first half of 2024, Xinte Energy’s production cost was around CNY48 per kg. These firms mainly produce rod-shaped silicon, which involves a different production process than that of granular silicon.

GCL had vowed earlier last year to slash the production cost of granular silicon to below CNY30 (USD4.12) per kg from September 2024. This would be possible thanks to technological advancements and the rapid release of additional production capacity, Chairman Zhu Gongshan said at the 2024 mid-year performance briefing.

"In the first quarter this year, GCL is expected to become the first silicon producer to break out of the downward spiral in profits," Zhu said. In the second half, once the building of a 60,000-ton factory in Xuzhou is completed, the electricity consumption per kg of polysilicon will drop to between 10 kilowatt hours and 12 kWh, he added.

Due to GCL’s competitive advantages, the company is likely to reverse the slide in profits this year, Co-Chief Executive Officer Lan Tianshi said in a recent media interview. But the entire industry may not see a recovery until 2026 or even 2027.

All of China’s polysilicon producers are operating at reduced capacity, which has helped stabilize the price of silicon. Polysilicon prices are showing signs of a slight rebound this year thanks to the production halts and reduced output. However, until silicon producers can break even, leading firms will still restrict production to adjust the balance between supply and demand.

GCL has not released its performance forecast for 2024 so far. But data from the three other leading silicon producers paint a dismal picture. Tongwei is bracing for a net loss of between CNY7 billion (USD961.5 million) and CNY7.5 billion, Daqo New Energy expects to run up a deficit of between CNY2.6 billion (USD357 million) to CNY3.1 billion and Xinte Energy anticipates a net loss of between CNY3.8 billion and CNY4.1 billion.

GCL’s share price [HKG:3800] closed up 0.8 percent at HKD1.18 (USD0.15).

Editor: Kim Taylor