Sep. 10, 2008 (China Knowledge) - China Wind Systems announced on Monday that it has signed a letter of intent to supply shafts and gear rims used in 1.5 megawatt gearboxes to Hangzhou Advance Gearbox Group Co. Ltd, one of the top three gearbox producers in China.

The deal marks the first step in China Wind System's transition to a wind power components manufacturer, said the company.

Under the agreement, China Wind Systems will firstly supply two shafts and five gear-rim prototypes according to the technical specifications of Hangzhou Advance Gearbox Group. If the initial supply reaches Hangzhou Advance Gearbox Group's requirements, the company will further purchase shafts and gear rims from China Wind Systems in 2009 for use in its 1.5 MW gearboxes.

Detailed terms of the deal have not been set yet. At present, Hangzhou Advance Gearbox Group produces 500 gearboxes per year, and total tonnage of shafts and gear rims in a gearbox is nearly 30 to 50 tons, while the current average selling price per ton of forged products in a gearbox is RMB 15,000, according to sources.

Chairman and CEO of China Wind System said the company expected to fulfill Hangzhou Advance Gearbox Group's need for precision wind components. He said the company expected its forged products sales for use in the wind power industry to hit US$7 million in the fourth quarter this year, accounting for 44% of the company's total revenue.