The much-maligned China Sunergy (Nasdaq: CSUN) stock is trading at $6.51 per share Tuesday, up 7.2 percent from the closing price of $6.07 Friday, after an announcement that it signed a contract for 68 megawatts worth of silicon wafers.

The Chinese solar-cell manufacturer hasn't disclosed its supplier, other than to say it is based in Taiwan, because China Sunergy signed a nondisclosure agreement as part of the negotiations, according to a company spokesperson.

But China Sunergy has said the contract is for 156-millimeter monocrystalline wafers for 2007, 2008 and 2009, with most of the wafers coming in 2008 and 2009 and pricing terms subject to quarterly negotiation.

Silicon has been the company's Achilles heel. The silicon shortage also has been a problem for a number of Chinese solar companies (see Could China Steal the Solar Throne?), but China Sunergy has been emblematic of the issue.

The company, which made its Nasdaq debut in May, initially offered shares at $11 each. The price grew to $16.56 per share by the end of the first day, only to sink more than 63 percent after the company in August posted a second-quarter loss of $3.8 million, or 14 cents per share, when analysts had expected a profit of $56.5 million, or 2 cents per share (see Silicon Steals the Spotlight, Again).

China Sunergy blamed the silicon shortage for its missed earnings, reporting that the cost of making its cells more than doubled from the last year and cutting a planned expansion, from six production lines to four.

The company isn't changing its guidance based on the new contract, the China Sunergy spokesperson said.

Still, Mark Cox, CEO of New Energy Fund, an energy hedge fund, said the news is great for China Sunergy.

"[Sixty-three megawatts] is a lot," he said. "Having halved in price, and getting a third of the price since the peak, any good news like this would be great for the stock."

Piper Jaffray analyst Jesse Pichel on Monday said Chinese companies are feeling the silicon shortfall more because they are newer to the market and haven't been able to lock suppliers into lower prices (see ET Solar to Light Olympic Court).

As long as Chinese companies are paying market prices for silicon during a shortage, they are going to suffer, Cox agreed.

Contracts could make a difference, because long-term contract prices have averaged $60 to $70 per kilogram, compared to about $250 per kilogram for so-called spot prices, he said.

Newcomers signing contracts now could well be paying more than average, compared with market incumbents, but long-term contracts are still a good idea, he said. New silicon production has been delayed, meaning less might be available next year than previously expected, he said.