Yingli Green Energy entered into a new supply contract to replace its 1,232 ton polysilicon supply arrangementswith Sichuan Xinguang Silicon Science and Technology Co., Ltd. Under the Original Contract, 50 tons have already been delivered and an additional 182 tons are committed to be delivered before the end of the first quarter of 2008 with the remainder to be delivered by the end of 2008.
Under the Original Contract, the price of the polysilicon that Xinguang will supply to Yingli Green Energy in 2008 was not specified. The New Contracts provide a fixed unit price on the total committed volume as well as a unit price adjusent mechanism. Under the terms of the New Contracts, the fixed unit price will be adjusted if the market price of polysilicon upon delivery fluctuates outside a 5% band that was based on the then prevailing market price.
In addition, the New Contracts provide that if one of the parties requests further adjusent to the unit price, the performance of the New Contracts will be suspended until both parties reach an agreement on pricing. Yingli Green Energy expects the New Contract to help clarify the visibility on the Company's 2008 cost structure.
"As one of China's leading polysilicon producers, we are pleased that the quality of our products has been recognized by Yingli Green Energy, one of the world's leading PV product manufacturers," Mr. Shaozhang Chen, President of Xinguang commented.
"This amended contract demonstrates both parties' commient to further strengthen our strong relationship in the fast growing and rapidly changing PV market."
"Xinguang has been one of our major suppliers and we are very pleased that a significant portion of our polysilicon requirement for 2008 remains secured," said Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy.
"The polysilicon shipped from Xinguang so far in 2007 has already been processed and used in the production of our PV products, and to date, our PV product output using this polysilicon has met our quality standards."
