Investors favor long-term agreements for polysilicon, because it shields the purchaser from expensive spot prices.
Piper Jaffray analyst Jesse Pichel said high prices for polysilicon--a key material used in solar cell manufacturing--eroded LDK's margins.
Growing demand for polysilicon from solar companies has pushed prices upward, with prices expected to remain high into 2008.
However, the average price for polysilicon imports during the period dropped 47.5% compared to the previous year, the data showed.
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But with Chinese demand for polysilicon growing exponentially, the country has had to import significantly higher quantities of polysilicon this year.
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The increased focus on solar energy by many countries has led to a direct increase in the demand for polysilicon in the recent past.
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The global demand for polysilicon was about 42, 000 metric tons in 2008, and is expected to increase to about 100, 000 metric tons by 2014.
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Many of the Chinese cell and panel producers are locked into forward contracts for their supplies of polysilicon.
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One producer of crystalline polysilicon cells for photovoltaic modules, JA Solar (JASO, 6.45) , looks dirt-cheap even after bouncing 197% from its bottom.
At which point several manufacturers started making polysilicon specifically and directly for the solar cell market.
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Oversupply of solar equipment and polysilicon in China means that companies are desperate for sales.
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Last week GT Solar ( SOLR), a global provider of polysilicon production technology, crystalline ingot growth systems and related photovoltaic manufacturing services for the solar industry, announced that it had acquired privately-held Crystal Systems.
Zaman notes that Japan accounts for 2 GW of expected 2011 demand, over 19, 000 metric tons of polysilicon capacity, 650 MW of wafer capacity, 2.2 GW of cell capacity and 2.5 GW of module capacity.
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