We have previously commented on Suntech’s financial problems so it is concerning to hear of another situation involving the company. Apparently, the Chinese solar panel manufacturer has had $1.3 billion of orders for polysilicon with OCI from South Korea cancelled.
Polysilicon is used in the manufacture of solar photovoltaic panels
(image credit: stantontcady)
This may have resulted in the share price of OCI dropping by 9.5% which is a significant reduction and is the lowest that the shares have been on the South Korean stock exchange in the last six years.
Polysilicon is the main raw ingredient that is used in the manufacture of solar photovoltaic panels.
Manufacturers of solar panels tend to sign long-term contracts and use a number of different suppliers of polysilicon so Suntech will hopefully have an adequate supply.
However, it is just another unfortunate event in Suntech’s recent history. It was not long ago that they were the largest manufacturer of solar panels in the world yet now find themselves struggling with debt and questions are now being asked about the company’s future prospects.
It was only back in March 2013 that Suntech found themselves defaulting on hundreds of millions of dollars in bonds and very quickly thereafter their main subsidiary Wuxi Suntech Power Co Ltd went bankrupt. The company are now more than $2 billion in debt and their value is very low.
It will be interesting to find out exactly what level of supplies of polysilicon Suntech actually hold. They no doubt have contracts with other companies as referred to earlier. In the past they have had contracts with the likes of GCL in China, DC Chemicals in South Korea and MEMC from the USA.
It will also be interesting to find out what the financial implications of these contracts being cancelled with OCI may have.
We await developments.
