Yingli boosts polysilicon supplies with five-year deal

OCI, South Korea's largest maker of polysilicon, has received a $442m (£287m) order from China's Yingli Green Energy Holdings to supply the materials for manufacturing solar cells.

The five-year deal will run from 2011 to 2015, according to a statement released earlier today.

Yingli's nascent in-house polysilicon plant, Fine Silicon, has an annual production capacity of 3,000 metric tons, but it still cannot meet the company's demand for the material.

Currently, Yingli Green Energy has solar cell production capacity of more than 600MW a year, but two new Chinese plants boasting 300MW and 100MW of capacity both started initial production in July and are expected to bring Yingli Green Energy's full annual production capacity to 1GW.

The company has seen sales rise after a multimillion-pound advertising campaign at the World Cup in South Africa.

Earlier this month it announced results that far outstripped analysts' expectations, with revenue rising 80 per cent year on year to $398m.

In China the firm has tabled bids for four large-scale solar power projects, which could deliver more than 80MW of orders, while the company has also secured a position in the US market, becoming the leading supplier of PV modules in New Jersey and California.

Meanwhile, in Europe Yingli recently confirmed it would deliver 33MW-worth of solar panels between October this year and April 2011 to the largest solar photovoltaic farm in France.

OCI recently ordered $23.4m-worth of reactors from GT Solar as part of an $800m project to improve its polysilicon production capacity which was begun two years ago.

The project will give the firm an extra annual manufacturing capacity of 10,000 metric tons when finished in October 2011, bringing its total capability to 27,000 metric tons annually.

Despite the continuing oversupply of polysilicon, OCI believes the market demand for high-efficiency solar cells and preference for high-purity polysilicon will grow steadily over the next few years.

Its bet on expanded production now appears to be paying off and in addition to the Yingli deal, the company won a $111.5m polysilicon order from Taiwan earlier this month.