Tuesday, April 03, 2007

Calls of Note Part 6

- ThinkEquity's David Edwards notes that over the course of the last week, the firm visited several public and private solar companies in China. As is common in the industry, many conversations focused on silicon prices, module ASPs, and margins. Most module players in China will tell you that the silicon shortage is waning and that availability is increasing. Several producers have reported greater than 10% declines in feedstock prices - both at the wafer and silicon level - in the past six months. Additionally many Chinese producers have optimistic outlooks on the silicon supply moving forward with the bottleneck relaxing significantly by late 2007 vs. previously anticipated 2008.

Firm is cautious toward this outlook as many of these views are coming from producers that have relied solely on spot market purchases (and prices) if any supply was available at all. So, $250/kg for silicon may seem like a good price to a wafer manufacturer that was paying $300/kg last year - but that is a still a far cry from the best long-term contract prices that are well below $100/kg. In other words, they think any softening of the situation is perceived more favorably in China than it actually is for the market more broadly.

Notablecalls: Not actionable but good to know category. Not really sure what to make of this. Don't think WFR will get hit follwing these comments.

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