China Sunergy Co. continued to experience tight supplies in Q2
Shares of China Sunergy Co., Ltd. (Nasdaq: CSUN) tumbled 12.96% or $1.81 to $12.17 in Tuesday morning trading after the specialized solar cell manufacturer announced before the opening bell that it continued to experience tight polysilicon supplies in China's solar market in the second quarter ended June 30, 2007.
The Chinese company said that even though the situation improved from a year ago, the relatively tight supply of polysilicon affected the quality, quantity and delivery of wafers. The tight supply situation ratcheted up overall wafer prices in the spot market, which increased pressure on China Sunergy’s margins, according to the company.
“To address the supply challenges, we continue to work on expanding our existing key supplier relationships and sourcing new suppliers,” said CEO Tingxiu Lu. “As a result of the new supply agreements we reached during the second quarter we are now confident that we will be able to secure our wafer supply requirements for the second half of 2007 and 2008.”
In June, China Sunergy entered into three supply contracts and framework agreements with LDK Solar Co., Ltd, Konca Solar Cell (Wuxi) Company Limited and Changzhou Xiandai Communications Optic Fiber Co., Ltd for a net supply of a total of approximately 11.9 million and 4.4 million monocrystalline 125-millimeter and multicrystalline 156-millimeter wafers for the second half of 2007 and 2008 respectively.
Also in June, China Sunergy entered into a 10MW sales contract with a German solar module manufacturing company Solarwatt AG for the second half of 2007 valued at approximately 21.7 million euros.
On the production side, China Sunergy said it produced 20.1MW of solar cells in the second quarter; a 93% increase on a year-on-year basis and similar to the amount of solar cells produced in the first quarter of 2007. The company also said that Monocrystalline125-millimeter cells continued to account for the majority of production (85%) and sales (88%).
Detailed financial results for the second quarter will be disclosed on August 24.
