Hello, and welcome to the Daqo New Energy's First Quarter 2015 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. Now I'd like to turn the conference over to Kevin He. Mr. He, please go ahead.

Thank you, everyone for joining our conference call today. I'm Kevin He, the Investor Relations of the company. Daqo New Energy just issued its financial results for the first quarter of 2015, which can be found on the company's website. To facilitate today's conference call, we have also prepared a presentation for your reference. Today, attending the conference call, we have Dr. Gongda Yao, our Chief Executive Officer; Mr. Shihua Su, our acting Chief Financial Officer; and myself. The call today will feature an update from Dr. Yao on business and the operational developments as well as the company's financial performance for the first quarter of 2015. After that, we will open the floor to Q&A. Without further ado, I now turn the call over to Dr. Yao, please.

Good morning. In the first quarter of 2015, we had further increased our production volume to 1,801 metric tons from 1,791 metric tons in the fourth quarter of 2014. More importantly, we reduced our total production cost to $12.80 per kilo and our cash cost to $10.53 per kilo, which should represent the best ever cost structure in our Xinjiang facilities. The cost reduction was primarily due to the lower electricity consumption on a per-unit basis, contributed by improvements in the production efficiency. In the first quarter of 2015, we shipped 1,532 metric tons of polysilicon and 18.8 million pieces of wafers. The average selling prices or ASPs for polysilicon were $18.09 per kilo. We achieved EBITDA of $11.4 million, operating income of $4.1 million and net income attributable to Daqo shareholders of $1.2 million in the first quarter of 2015. In May, we successfully completed the annual maintenance in our Xinjiang polysilicon facilities, which has affected our production for 5 working days. We will complete all the preparation work for the expansion of our polysilicon capacities by 6,000 metric tons by end of May and start pilot production in June. We expect to fully ramp up the capacity during the third quarter. Given that our current cost structure is already below $13 per kilo, we are confident that we will achieve the production cost target of $12 per kilo when we fully ramp up to 12,150 metric ton capacity. We believe polysilicon ASP will recover in the second half, driven by increased demand not only in China, but worldwide as well. For the second quarter of 2015, the company expects to ship 1,320 metric tons of polysilicon. The annual maintenance has affected our polysilicon production for 5 working days. In addition, in the second quarter, we expect our internal…

[Operator Instructions] And the first question comes from Philip Shen with Roth Capital Partners.

So in terms of your guidance, can you help us understand the rationale for shipping more internally the polysilicon to your wafer business? And also, as a follow-up, can you talk about your views on ASPs? I know in your remarks, you expect them to be up in the back half of this year, but any color on your ASP view would be helpful as well.

Okay. As you noticed, the total amount of volume is still very close to 1,700 metric tons to the production. So we're expecting around 5 days to impact -- is typically is around 100 metric tons, right? So our production rate is around 20 metric tons or so per day. In terms of why we shifted more internal shipments is by the fact that in today's market, we found when we buy third-party of the polysilicon, we didn't get any for the -- we can delay some payments or as some -- the period for the payment. And the payment term is the same or even worse than when we ship to our some key customers. So what we're trying to do in the second quarter, we should still continue to focus on our key customers, but we were shifting some to the small customers, small not regular long-term contract customers to our internal wafer usage. So by this way, we can more efficiently using our capital. In other way -- otherwise, we have to pay cash advance before we receive the polysilicon. I don't know if that answers your question.

It does. And the second question was on ASP, just if you can provide us your latest view. I know you think there is some potential upside risk in the back half. What gives you that confidence? And how much higher could the ASPs go?

Well, the -- basically, the -- as we report that we have like $18 ASP, and we're getting to current quarter. We have been seeing, actually, the ASP price continue decreasing. At the current level, it's below, I think, at $16 level. So we believe -- but we still believe our view, as we are in the week ago, more than a week ago, in Shanghai's solar show at -- in the second half, as I said in the business update that the we strongly believe the polysilicon price will be strong because based on demanding. Current decreasing ASP is still due to the factor that a lot of foreign-produced polysilicon is getting into China through the process trade. And we strongly still believe our polysilicons, they are very competitive in the market in China primarily because of high quality. And also, we still try our best to reduce our cost base, especially when the additional 6,000 metric ton capacity were added to our existing 6,000 metric ton capacity by Q2. And starting to realize a $12 cost structure when we ramp up to full capacity of 12,000 metric tons in Q3.

So the ASP, I think you said below $16. That's a bit of a surprise. But that said, what else do you think is driving that? I mean, obviously, the processing trade loophole is being exploited. Are there any other factors driving pricing down? And what's your view as to where the pricing bottoms?

Okay. We heard the steel import is a bigger factor of -- for them. For example, the -- in the long term, we heard a lot of FBR, those granular poly FBR-produced in the sodium-based polysilicon. But it's not true in China, we don't see mass production. Although in our cost structure for Chinese domestic poly makers, we're still fundamentally the same as before. Although it may be slight -- like for us, even we have started to implement full cost structure from last year, but not as dramatically as the ASP dropping. I think ASP dropping is not typical for cost structure of the Chinese poly maker is decreasing. It's because still over -- larger quantity of the imports from outside China, we still heard that they are selling at much lower price than before into the China. But a lot of -- some indications in the market show that a lot of people talking to us after June. There would be sharper decreasing for those process trade, although we don't know if it for sure is true, but the participants for the process trade for the downstream customers, they express their concern after June. So we will try in talking to those customers to view there some long-term contract in the -- for the second half of 2015 as they are clearly looking for domestic replacement for the polysilicon supply side. So we'll be more clearly to see that when we probably enter into the June of 2015. At this moment, it's still not clear about after June market there is, but we're still holding the same view that in the second half of 2015, polysilicon price will recover from a calendar basis.

And the next question comes from Pranab Sarmah with AM Capital.

I have 2 questions. First one is basically products and costs in second quarter. It looks like your output will be slightly lower than first quarter because of maintenance shutdown. So how should we look at your cost of polysilicon production in the second quarter?

It's -- well, so from depreciating point of view, May will be slightly higher, but the -- if you look at the -- we still -- I cannot tell the numbers because we still are half way to go. But it looks like in the Q1, we also have a relatively not favorable month, which is February. So we are shutting by 2 to 3 days, but in May, we have shutdown [ph] for 5 days. So we will impact a little bit more than February. On the other hand, if we're looking to the Q1 numbers, March is really a successful month, which is we have the record production volume and which we're thinking we are trying to maintain that rate in the -- for example, in the April and June, and then May will be impact. I would say the cost structure will be around the $13 level. I think probably the major factor is still 5 shutting down days for the maintenance impact.

And second question is on your ramp-up to 25,000 tons. I think earlier, you might have the plan for 2 types of ramp-up, either get some of that equipment from Chongqing to Xinjiang or buy all new equipment. So which direction is now you think that you'll be moving?

We still follow that direction because abiding conditioning protect [ph] the market today, also by the ASP today. So we still are very firmly looking for the path that using minimal capital to increasing -- steadily increasing our capacity when our total metric tons is realized in Q3. So we will actively consolidate all the efforts. Right now is by one side is we are trying to getting all the permits to ramp up to 25,000 metric tons, which include environment, safety, et cetera. And on the other hand, we are going to more detail by preparation for evaluation with the equipment. We can use the -- in Xinjiang from Chongqing. So we are in the engineering review -- preview stage right now, as we say. A firm decision has to be made in Q3. Although by Q2, end of Q2 or beginning Q3, we may start to do some of our fundamental design work for the 25,000 metric ton capacity regarding the location and also logistic for production line. For example, the parking [ph] design and material flow [ph] , et cetera. Yes. So we are still firmly going to that direction, is to utilize small capital and trying to steadily, getting into additional 12,000 metric tons. So typically I would have 2 incremental ways to do that. Instead of by 1-stage step for 13,000 metric tons, we may be by 2 steps. Each step represents about 6,000 metric tons.

And the next question comes from Paul Strigler with Esplanade.

Do you have any idea about the cost structure of the non-OCI Korean capacity? If they're shipping in at sub-$16 are they close -- is that above their cash cost? And sort of do you have any idea about their financial wherewithal, how long someone like a Hanwa or a Hankook could persist in shipping at the current levels?

Paul, thank you for the question. I think we don't know exactly what the cost structure they have because obviously, we believe, at least, it's very close to their cash cost, we think -- we're thinking. And on the other hand, we're pretty sure their cost structure for OCI is lower than the Hanwa, for example. That's what we heard, but again, we do not have either very clear cost structure. But then we think that OCI is very competitive in Korea, the poly makers, among all Korean poly makers. But we believe their cash cost is very close to whatever they're faring in China right now.

Thank you again for everyone joining the call today. And should you have any question, please contact me. You can find my contact information at the bottom of the press release. Thank you, everybody. Bye-bye.

Thank you. Bye.