UPDATE 2-Trina Solar cancels polysilicon plant; shares up

(Adds analyst comment, share price)

NEW YORK, April 14 (Reuters) - Trina Solar Ltd (TSL.N: Quote, Profile, Research), a solar photovoltaic products maker, said on Monday it scrapped a plan to build a $1 billion polysilicon production plant, sending its shares to a three-month high.

"As a result of favorable change in the polysilicon supply environment, Trina Solar now believe it has greater access to polysilicon feedstock to support its growth objectives," the company said in a statement.

Cancellation of the plant, which was to have an output capacity of 10,000 metric tons, will also void a supply contract with GT Solar Inc, Trina Solar said.

Polysilicon is the key raw material for most photovoltaic solar cells, which turn sunlight into electricity. Tight supplies of the material have pushed prices sharply higher over the past 18 months, squeezing margins in the solar industry.

However, supplies are expected to grow as producers of polysilicon expand their output to meet demand from the solar industry.

"I would characterize this as a classic 'make versus buy' decision," Robert Stone, analyst with Cowen & Co LLC said, noting that Trina announced earlier this month it had signed an eight-year contract to buy polysilicon.

"I believe what changed is the company is starting to see long-term contracts with more attractive terms," he added.

Trina, based in Changzhou, China, has pursued a "vertical" strategy in the solar sector, spreading from production of polysilicon and the ingots used in cells to manufacturing the cells and solar modules.