(Yicai Global) Dec. 7 -- Daqo New Energy has begun expanding its factory in northern China after winning a slew of long-term supply contracts for a core solar panel material. 

The cell material supplier will spend CNY9.2 billion (USD1.3 billion) to finish the second phase of its plant in Baotou by 2023, with an additional annual capacity of 100,000 tons of polycrystalline silicon, the Shihezi-based firm said in a statement yesterday. 

The boost is needed as Daqo has gained nine long-term polycrystalline silicon contracts with a total value of about CNY377.4 billion (USD54.1 billion) since mid-October.

Daqo broke ground on its new Baotou production base in December 2021. The first phase of the plant is scheduled to be fully operational by the second quarter of 2023, but the company was not sure about the timetable for phase two at that time.

After the expansion is completed, the capacity of the factory in Inner Mongolia will increase to 200,000 tons per year so the firm's total will reach 305,000 tons, more than three times the figure recorded when the Baotou plant began construction. 

Daqo has benefited from the global renewables rally as the company’s net profit more than tripled to about CNY15.1 billion (USD2.2 billion) in the first three quarters of this year from a year earlier, mainly because of surging polysilicon prices.

But after years of short supply, China’s polysilicon market is changing. The country's annual production capacity should double this year from 2021 to 1.2 million tons and double again to 2.4 million tons by 2023, according to the China Nonferrous Metals Industry Association’s silicon branch. Silicon output should reach 820,000 tons this year, a two-and-a-half-fold jump from last year.

Daqo's stock price [SHA: 688303] climbed 0.5 percent to close at CNY54.59 (USD7.80).

Editor: Emmi Laine, Xiao Yi