One major drag is that its cost of producing polysilicon is well below the spot price.
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Oversupply of solar equipment and polysilicon in China means that companies are desperate for sales.
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Over the past two years, the price of the prevailing solar technology polysilicon-based photovoltaic cells has plummeted.
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The number of polysilicon manufacturers has increased from 7 in 2008 to 70 in 2010.
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At which point several manufacturers started making polysilicon specifically and directly for the solar cell market.
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Investors favor long-term agreements for polysilicon, because it shields the purchaser from expensive spot prices.
Chinese polysilicon producers accuse the U.S. of dumping said chemicals onto the Chinese market.
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The Bush Administration has decided to decontrol next week yet another sensitive dual-use technology: polysilicon.
The company said the Fine Silicon charge reflects a sharp drop in the spot market price of polysilicon.
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Prices of polysilicon wafers used to make solar cells plunged by 73 percent from 2010 to last year.
Many of the Chinese cell and panel producers are locked into forward contracts for their supplies of polysilicon.
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Using less of the feedstock is key to lowering costs because polysilicon prices have surged on increased demand.
But by the time the company fired up its commercial production line, polysilicon prices had begun to fall.
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Piper Jaffray analyst Jesse Pichel said high prices for polysilicon--a key material used in solar cell manufacturing--eroded LDK's margins.
Polysilicon is a key ingredient in solar panels, and supply has not kept up with demand in recent months.
The plant is designed to produce 2, 500 metric tons of polysilicon a year, with a possible expansion later on.
Unlike other PV components, polysilicon production cannot be idled incrementally, which forces manufacturers to cut prices rather than output.
The price of polysilicon has risen lately (up nearly 200% since late 2005), but MEMC owns its own supplies.
Growing demand for polysilicon from solar companies has pushed prices upward, with prices expected to remain high into 2008.
Any potential tariffs on polysilicon imports could drive up the cost base and impact the profitability of these companies.
Meanwhile, Chinese polysilicon producer Daqo New Energy (DNE) revised its second-quarter financial guidance downwards to reflect these price reductions.
Meanwhile, Xinhua also is reporting that many China-based polysilicon producers have suspended production due to weaker solar panel exports.
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Hoku Materials (nasdaq: HOKU - news - people ), reflecting the diminished values of the polysilicon suppliers.
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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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In retaliation, the Chinese government launched investigations into dumping of polysilicon into the Chinese market by U.S. and European manufacturers.
Dow Corning's equity earnings were down 46% on a year-over-year basis, driven by severe weakness in the solar polysilicon market.
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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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Production costs of solar cells, and correspondingly, solar modules are also decreasing due to declining input costs, particularly polysilicon and silicon.
The growth of the solar industry has been limited by the supply of the polysilicon material used to make solar panels.
Based in Kapolei, HI, Hoku, which is also building a polysilicon plant in Pocatello, ID, has contracts with Solar-Fabrik and Sanyo Electric.
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