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Wednesday, March 18, 2009

Poly prices to drop

This morning there are a number of data points suggesting weakness in polysilicon pricing.

Digitimes reports there were some small transactions at $100/kg in the spot market but that most prices have been more like $120-$130/kg.  Also according to Digitimes, China-based solar cell makers are predicting contract prices dropping from $100-130/kg to $60/kg and eventually to $25/kg.  LDK’s CEO suggested spot prices have room to fall.  Lastly, Barclays indicated the weak semi market is forcing Japanese suppliers to sell excess poly in the Chinese spot market after 2 months of stability.  Barclays says spot pricing is now below $100/kg.

WFR is a silicon supplier to semiconductor and solar manufacturers.  WFR has been a notoriously poor performer, even when they had a rising tide of semiconductor and solar demand.  As demand in both markets has flagged, they’ve been forced to renegotiate their allegedly iron-clad contract prices lower.  I’m thinking they’ve got a rough day ahead of them as investors factor in a more aggressive spot pricing environment.

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