China Sunergy shares rise on two days of supply deals worth 500 MW

Shares of Nanjing, China-based China Sunergy (Nasdaq: CSUN) were up nearly 8 percent to $1.78 in afternoon trading on news that the company signed two supply deals in as many days worth more than 500 megawatts.

The solar cell manufacturer said today it signed a letter of intent with City of Industry, Calif.-based photovoltaic system integrator SolarMax Technology for 25 megawatts of solar cells to be delivered this year.

But the agreement went further, with the companies agreeing to work together on all projects and naming SolarMax a sales agent and representative of China Sunergy in the U.S.

China Sunergy CEO Ruennsheng Allen Wang said the agreement furthers the company's goals of selling into the U.S. and European markets.

Just yesterday, China Sunergy signed a 10-year deal to supply up to 490 MW of solar cells to Erfurt, Germany-based module producer asola Advanced and Automotive Solar Systems.

The agreement runs from 2009 to 2018, with 30 MW to be delivered in 2009 and 50 MW in each of the following years. The companies are still negotiating the final terms of the agreement.

Many other China-based solar manufacturers have faced bankruptcies or lower revenues because of oversupply (see China solar market in late 2009 spells glut, Bankruptcies start to plague Chinese solar and Bad news from Q-Cells spreads through solar supply chain).

China has around 140 solar-grade crystalline silicon wafer makers. Estimates are that the wafer industry is now operating at half its capacity because of factory shutdowns in February (see Is this the end of China's solar boom?).

Polysilicon hit a peak of $400 per kilogram in July 2008, falling to less than $100 at the end of the year. Polysilicon is now trading for $30 to $40 per kilogram and is likely to continue dropping (see Top Chinese firms propose solar electricity for 14¢ per kWh).

But China Sunergy has announced a number of new supply deals in recent months, including 22 MW in 2009 for Germany's Solarwatt (see China Sunergy, Yingli announce supply deals amid sector turmoil). In October, China Sunergy signed a contract to buy single-crystal silicon ingots from Hitachi High-Technologies (TYO: 8036) for the production of 210 MW of solar cells (see China Sunergy inks deal with Japanese ingot maker).

In July 2007, China Sunergy received a 20-year patent a new N-type solar cell (see China Sunergy rises on patent announcement).