(Yicai Global) Oct. 25 -- Shares in TCL Zhonghuan Renewable Energy Technology advanced as much as 4.1 percent today after the leading Chinese solar wafer manufacturer said it has placed a long-term order for CNY131 billion (USD18 billion) worth of solar-grade polysilicon to ensure the supply of raw materials.

TCL Zhonghuan’s share price [SHE:002129] closed up 3.2 percent at CNY43.11 (USD6). Earlier in the day it hit CNY43.50.

TCL Zhonghuan is ordering 432,000 tons of solar-grade polycrystalline silicon from an unnamed supplier that will be delivered over a six-year period from 2023 to 2028, the Tianjin-based company said yesterday. The actual purchase price will be negotiated by the two parties on a monthly basis.

The contract is worth CNY131 billion based on the latest average market price of CNY303,000 (USD41,571) per ton, as given on data provider PV InfoLink on Oct. 20. But the predicted average market price from this year to 2027 is CNY146,000 per ton, in which case the contract would be worth around CNY63 billion (USD8.6 billion).

The price of silicon has doubled since the beginning of the year, as demand outstrips supply. But a number of expansion projects by silicon suppliers means that although demand will stay high, more supply will result in a gradual decline in prices in coming years, industry insiders say.

TCL Zhonghuan was careful not to mention the supplier’s name. However, the same day, silicon producer Daqo New Energy said it has received an order for 432,000 tons of polysilicon from an anonymous customer, also effective from 2023 to 2028.

This is the third huge order for polysilicon that Shanghai-based Daqo has won in less than two weeks. It received an order for 155,300 tons on Oct. 13 and another one for 46,200 tons on Oct. 18. Both are effective from 2023 to 2027.

When combined with TCL Zhonghuan’s order, based on current market prices, the Shanghai-based company has bagged CNY200 billion (USD27.5 billion) in orders in the last two weeks.

Daqo’s stock [SHA:688303] closed up 4 percent at CNY51.92 (USD7). Earlier in the day it soared 4.8 percent to CNY52.38.

Editor: Kim Taylor