JinkoSolar Signs Nearly $30B Worth Polysilicon Supply Contracts in a Month

To secure long-term polysilicon supply, solar panel manufacturer JinkoSolar has inked a significant polysilicon supply deal with a value of more than RMB103.3 billion (US$14.9 billion). This comes only weeks after it signed a similar contract with Xinte Energy for RMB102.1 billion (US$14.7 billion).

On September 10, JinkoSolar declared that it had entered into a signed purchase agreement with Tongwei- world’s largest polysilicon supplier, for about 382,800 MT of polysilicon products from the company’s subsidiaries.

The overall contract value is anticipated to be around RMB103.3 billion based on the average transaction price of RMB305,100/MT (US$44,010/MT) for Chinese mono-dense poly material reported by the nation’s Silicon Industry Branch of China Non-Ferrous Metal Industry Association (calculation excludes tax and does not constitute a price commitment). The ultimate transaction will depend on the total trading volume and the actual purchase price, which will be agreed upon each month.

The notification states that the aforementioned contract is a long-term purchase agreement that will last from this month through December 31, 2026. When the agreement goes into force, the current Polysilicon Purchase and Sales Framework Agreement between JinkoSolar, its subsidiary Sichuan JinkoSolar, and Tongwei will immediately expire.

According to JinkoSolar, the contract was signed with a subsidiary of Tongwei, a key provider of polysilicon materials, and the two companies have a successful long-term strategic alliance.

On August 26, less than two weeks ago, JinkoSolar made another significant polysilicon purchase announcement. From 2023 to 2030, Xinte Energy would sell 336,000MT of native polysilicon to JinkoSolar and its affiliates for an estimated RMB102.1 billion.

As a result, in less than a month, JinkoSolar has comitted to invest more than RMB200 billion in locking up polysilicon material. The company’s profits are significantly impacted by changes in the price of silicon and other raw materials, as stated in its H1 2022 report. If the company’s inventory is not properly managed and the price of upstream raw materials fluctuates significantly, the company’s inventory price may decline or production costs may change, which would reduce earnings.

This year, silicon prices reached a ten-year high. To prevent misunderstandings and overinterpretations, the Silicon Industry Branch of the China Non-Ferrous Metal Industry Association announced in a notification on September 8 that it has chosen to postpone the publication of polysilicon pricing starting this week.

Before the announcement of the stop, polysilicon prices had increased for 29 consecutive weeks this year without showing any signs of a correction, reaching a ten-year high.

Most industry experts expect moderation to start from 2023, when new capacities should start coming online. However, the new capacities will enter a market hungry for more solar, making it very difficult to predict actual impact on prices.