Solar companies grapple with shortage of key material

New York

SOLAR manufacturers are being battered by higher costs and smaller margins, after an unexpected shortage of a critical raw material. Prices of polysilicon, the main component of photovoltaic cells, spiked as much as 35 per cent in the past four months after environmental regulators in China shut down several factories.

That's driving up production costs as panel prices continue to decline, and dragging down earnings for manufacturers in China, the world's biggest supplier. Canadian Solar Inc and Hanwha Q Cells Co have already reported steep declines in profit, and other companies will probably be affected as well, including JA Solar Holdings Co, which reports results on Wednesday, and JinkoSolar Holding Co, the biggest publicly traded panel producer.