China Sunergy Co., Ltd. (NASDAQ: CSUN) has entered into a new supply agreement with the European wafer provider REC Wafer for a high quality supply of monocrystalline 156-millimeter wafers for the seven years from 2009 through 2015. This is not China Sunergy securing this as an order, as the company is contracting for supplies here so that it can more adequately fill its orders.
China Sunergy noted that the scheduled shipments are expected to begin in early 2009 and will be completed at the end of 2015. It also noted that both amount and price are fixed according to the thickness of wafer and the year of shipment, although it noted there is some flexibility on amounts within certain limits.
The total purchases of wafers by China Sunergy from REC Wafer are expected to exceed $400 million over the life of the Agreement. Partnering with its new supplier should reduce the company’s reliance on the spot market, and it believes that the cost savings involved will ease the pressure it has recently seen on its margins.
China Sunergy is actually up 5% after the supply contract to $11.20 on the day.
Jon C. Ogg
June 25, 2008
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