Daqo Signs Polysilicon Supply Deal With JinkoSolar

The two Chinese companies signed a deal for two years. Daqo plans to double its production of polysilicon in early 2020.

Author: Belinda Zhou   

Daqo New Energy Corp. (NYSE: DQ) and JinkoSolar Holding Co. Ltd. (NYSE: JKS) have arranged a supply deal, which sent both stocks higher on Wednesday.

Daqo, based in Shihezi, said it has signed a two-year agreement to supply polysilicon to solar module maker JinkoSolar. The offering of 12,000 to 14,400 metric tons and 15,600 to 21,600 metric tons of polysilicon will be delivered during 2020 and 2021, respectively, on a monthly-adjusted pricing basis, according to the statement.

"We're very pleased to sign this two-year supply agreement with JinkoSolar which will further strengthen our long-term strategic relationship," Shihua Su, the chief marketing officer of Daqo, said in today's statement.

"Our two companies have a long-standing partnership that spans many years and we are delighted to have been selected for our ability to produce high-purity mono-grade polysilicon," he added.

Polysilicon, or polycrystalline silicon, is used as a raw material in the solar photovoltaic and electronics industry. Daqo's annual production capacity of polysilicon is 35,000 metric tons and it said it expects to double its production capacity in the first quarter of 2020.

"Once our Xinjiang polysilicon production facility expands to 70,000 metric tons capacity by the end of this year, we will be able to meet the rapidly growing demand from our mono-solar customers and the global solar photovoltaic industry," Su said.

Shares in Daqo closed at $49.42 per ADS, up 2 percent, while JinkoSolar saw its stock jump 1 percent to $19.42 per ADS Wednesday.