(Yicai) May 13 -- Chinese photovoltaic giant Tongwei reached an agreement with Longi Green Energy Technology to supply CNY39.1 million (USD5.4 million) worth of silicon materials to the Chinese solar panel maker.

Longi and its nine units will buy 862,400 tons of high-purity crystalline silicon products from six subsidiaries of Tongwei between this year and 2026, the Chengdu-based seller announced on May 11.

The pair will decide on the product prices on a monthly basis, but based on the latest prices from the China Non-Ferrous Metals Industry Association, the deal would be worth CNY39.1 billion, Tongwei noted. However, the price could significantly differ, given the changes in the macroeconomic environment and supply and demand, it added.

Tongwei also warned about risks, such as policy and market environment changes or force majeure, that could refrain the company from fulfilling the deal.

The signing of the agreement will help Tongwei achieve stable sales of high-purity crystalline silicon products and boost its operating performance, the firm pointed out.

This was not the first deal Tongwei and Longi signed. The pair inked a supply agreement for 55,000 tons of high-purity crystalline silicon in 2018 and another one for 203,600 tons of the same material in 2022.

Prices of goods along the PV industry chain have been falling since last year. According to Tongwei's latest annual earnings report, prices across four segments of the PV industry chain sank between 45 percent and 80 percent from the year before.

Tongwei's shares [SHA: 600438] were trading up 1.6 percent at CNY22.94 (USD3.17) as of 1.50 p.m. in Shanghai today. Longi's stock [SHA: 601012] rose 1.6 percent to CNY18.92.

Editors: Shi Yi, Futura Costaglione