RPT-UPDATE 1-PV Crystalox cuts outlook amid weak trading

* Says trading conditions remain extremely challenging

* Sees H1 shipment volumes in the range 55 to 70 MW

* Continues to operate at reduced wafer production levels

* Says accelerating its cost reduction programmes

LONDON, May 18 (Reuters) - PV Crystalox Solar cut its shipment outlook for the first-half of the year, and said trading conditions continued to remain challenging in the face of falling prices for solar wafers and industry oversupply.

Solar makers have seen profit margins evaporate over the last year as prices for the modules that turn sunlight into electricity have fallen sharply amid a global supply glut and declining government subsidies in Europe, the biggest market.

This has driven some players out of business, while other solar companies have been forced to cut jobs, reduce production and renegotiate raw material supply contracts.

PV Crystalox said on Friday spot market prices for solar wafers were down 70 percent since last April, falling below production costs.

"As a result of this adverse pricing environment we have to date been unable to reach agreement on acceptable wafer prices and volumes for the second quarter with some of our contract customers," the company said.

"Consequently shipment volumes during the first half of the year are now expected to be in the range 55 to 70 megawatt (MW), which is below our earlier expectation of 80-100 MW."

PV Crystalox also said it had reached an agreement over the termination of a long-term wafer supply contract, which would result in a cash settlement of about 90 million euros ($114.4 million) in the first half.

Shares in the company, which have fallen more than 90 percent in the past year, closed at 4.27 pence on Thursday in London.