TBEA announced on April 28 that its subsidiary Xinte Energy signed a “Strategic Cooperation and Procurement Agreement” to purchase 181,000MT of primary polysilicon from Donghai JA Solar over a period from April 2022 to December 2026. TBEA provides a wide range of solutions related to solar PV and the electric power system, while its subsidiary Xinte is a supplier of refined polysilicon and other materials. Donghai JA Solar is a subsidiary of vertically integrated solar enterprise JA Solar.
Based on the latest information on the prices of polysilicon dense materials, this deal is estimated to be worth around RMB 21.944 billion (excluding tax). The actual price commitment has yet to be disclosed, and the unit price will fluctuate over the procurement period on account of monthly negotiations. According to the coverage of this event by various energy news outlets, the cost of this procurement deal could account for almost half of TBEA’s audited operating income for 2020. TBEA said the deal ensures that Xinte will be able to provide a stable supply of polysilicon products in the future. This, in turn, will further improve the company’s revenue generation.
TBEA also released its financial results for 2020 in April. To capture more market share, the company has been expanding and upgrading its production capacity for polysilicon. It met its capacity target for last year of 36,000MT per year for high-purity polysilicon. In the downstream section of the PV supply chain, TBEA also experienced growth in its business of selling whole PV projects during 2020. All in all, the company’s annual operating income grew by 19.24% YoY to RMB 44.095 billion.
Recently in the Chinese solar sector, vertically integrated enterprises and wafer suppliers have been actively arranging long-term procurement deals with polysilicon suppliers. Earlier in December last year, Xinte signed a supply contract with the seven subsidiaries of Xi’an LONGi Silicon Materials. Later in March this year, Hongyuan New Materials signed a supply contract with Daqo New Energy. The former is a subsidiary of wafer supplier Wuxi Shangji Automation, whereas the latter is another major polysilicon supplier. Both deals also span roughly four years and are massive in terms of procurement quantity and value.
