[Asia Economy Reporter Eunmo Koo] As the market conditions for polysilicon, the raw material for the solar power industry, show signs of recovery, OCI's stock price is also drawing a gradual upward curve.
According to the Korea Exchange on the 3rd, OCI's stock price closed at 72,300 KRW, up 4.63% (3,200 KRW) from the previous trading day. OCI, which also set a 52-week high based on the previous day's closing price, has been steadily trending upward since the low point at the end of September. Since the low on September 24, OCI's stock price has risen 34.1%, nearly double the KOSPI return of 17.7% during the same period.
The gradual rise in OCI's stock price is interpreted as a result of the recovering market conditions for solar polysilicon combined with expectations of future price increases. Earlier, in the third quarter, OCI succeeded in turning a profit for the first time in eight quarters since Q3 2018. The Basic Chemicals business segment, which includes the polysilicon business, saw the largest profit increase. In the case of solar polysilicon, prices surged recently due to increased solar installations and production disruptions at Chinese companies with high market shares caused by fires and floods.
Researcher Sangwon Han from Daishin Securities commented, “The better-than-expected profitability and performance ultimately mean that the cost at the Malaysia plant is sufficiently favorable compared to market concerns,” adding, “Especially during the sharp rise in polysilicon prices due to supply concerns, the stock price also showed a strong performance, reaffirming that it is a key variable for the stock price.”
Earlier, OCI completely halted the production of solar polysilicon at its Gunsan plant in February. It was judged that maintaining domestic production of 'solar polysilicon' was no longer feasible due to competition from Chinese products. The Gunsan plant was converted into a semiconductor polysilicon production facility after stopping solar polysilicon production, which is now handled by the Malaysia plant.
Polysilicon supply and demand are expected to remain tight next year, suggesting continued price increases. Researcher Dongjin Kang from Hyundai Motor Securities said, “With the global solar demand recovery, polysilicon demand will increase by at least 100,000 tons annually,” and added, “While a significant price surge is difficult, an increase to around 11 to 12 USD per ton is quite possible.”
The growth trend for semiconductor polysilicon is also expected to continue. Researcher Kang predicted, “Semiconductor polysilicon shipments will increase from 1,000 tons this year to about 2,000 tons next year,” and forecasted, “In the long term, the growth of the semiconductor polysilicon business will continue due to major customers’ overseas semiconductor business acquisitions and localization of materials.”
As the business undergoes an overall turnaround, earnings are also expected to improve. According to financial information provider FnGuide, OCI’s operating profit for Q4 this year is estimated at 31.3 billion KRW, turning profitable compared to the same period last year. The annual operating profit for next year is also predicted to reach 161.9 billion KRW, marking a return to profitability after three years.
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