(Yicai Global) Aug. 29 -- Shares of Jinko Solar and Xinte Energy jumped after the former Chinese photovoltaic company penned a long-term contract worth around USD13 billion with the latter to secure its raw material supply.

Jinko Solar's Shanghai-listed shares [SHA: 688223] closed 9.5 percent higher at CNY17.44 (USD2.50) after surging as much as 13.2 percent earlier. The shares have moved up more than 65 percent this year.

Xinte [HKG: 1799] closed 4.3 percent higher at CNY21.95 after climbing as much as 5.5 percent intraday. The equity has rallied more than 40 percent in 2022.

Xinte, a unit of TBEA, will sell 336,000 tons of polycrystalline silicon to Jinko Solar from January 2023 to December 2030, the Changji-based parent of Xinte said in a statement recently.

The contract is worth around CNY90.3 billion (USD13 billion), based on recent transaction prices released by the Silicon Industry of China Nonferrous Metals Industry Association.

The deal will facilitate TBEA’s stable sales of polycrystalline silicon and has a positive impact on its business, it said.

Shanghai-based Jinko Solar said the contract will guarantee its stable supply of raw materials and is in line with its development plans.

Chinese PV panel makers have been seeking to secure their supply of raw materials amid rising prices and surging demand. For example, silicon supplier Tongwei inked a CNY50.9 billion sales contract with Qinghai Gaojing Solar Energy Technology in June. Moreover, Longi Green Energy Technology signed a long-term contract exceeding CNY44 billion with Tongwei in March.

Several government bodies, including the Ministry of Industry and Information Technology, issued a notice on Aug. 24 to recommend PV companies form long-term cooperation to help resolve some structural issues in the industry.

Signing long-term contracts has become common in the PV industry but these deals can be risky amid changes in policies, the market, and the business environment.

Editors: Shi Yi, Emmi Laine, Xiao Yi