China Sunergy renegotiating silicon ingot/wafer supply deal with REC

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Solar cell manufacturer China Sunergy has started renegotiating its monocrystalline-silicon ingot and wafer supply agreement with REC. The original seven-year deal (for the 2009-15 period) was signed June 2008 with REC’s SiTech unit, which has since been dissolved as a result of a merger earlier this year.

China Sunergy says it has entered into good-faith renegotiations with REC in respect to the overall arrangement of the supply deal and hopes to reach a mutually beneficial agreement between both parties.

Such renegotiations between solar PV materials suppliers and their customers have become common since the dramatic drop in polysilicon prices and increase in poly supply that have changed the market’s supply-demand dynamics since the fourth quarter of 2008.

During its announcement of its second-quarter financial results the end of last week, China Sunergy said that its quarterly blended wafer cost, as a part of production costs, declined to $0.96 per watt compared to $1.61 per watt in the first quarter. As the company fully consumed its higher cost inventory at the end of 2008, it said that its procurement flexibility facilitated the continued purchase of more raw materials on the spot market, which helped reduce blended wafer cost.

Wafer cost continued to decline as a percentage due to lower wafer pricing in the second quarter, the company said. Wafer cost per watt as a percentage of total production costs per watt declined from 81.4% in the first quarter of 2009 to 75.2% in the second quarter, according to China Sunergy.

The company saw its quarterly revenues rise to $70.1 million, an 89.5% increase over the previous quarter, and its non-GAAP net come in with income of $1.2 million.

 

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