SolarWorld wins again: US-China solar trade war deepens

Greentech Media

The Department of Commerce has again found in favor of the petitioner, SolarWorld, in that company’s trade case against Chinese solar module makers. This afternoon’s preliminary decision imposes significant tariffs on Chinese solar modules in the anti-dumping portion of this case.

Today’s decision also closes what SolarWorld called a “loophole,” which allowed Chinese module manufacturers to use Taiwanese cells in their modules, thereby circumventing U.S. trade duties.

SolarWorld has prevailed at pretty much every step of this case, despite opposing efforts from the Coalition for Affordable Solar Energy (CASE) and other trade organizations.

Here is today’s preliminary decision:

• Trina Solar and ReneSola/Jinko received preliminary dumping margins of 26.33 percent and 58.87 percent, respectively.
• 42 other exporters were hit with a rate of 42.33 percent
• In the Taiwan investigation, “mandatory respondents Gintech and Motech received preliminary dumping margins of 27.59 percent and 44.18 percent, respectively. All other producers/exporters in Taiwan received a preliminary dumping margin of 35.89 percent.”

In a June decision, Commerce found for SolarWorld as well, and levied substantial tariffs in its preliminary finding in the subsidy piece of the Chinese solar module trade investigation. Commerce imposed preliminary duties of 35.21 percent on imports of solar panels made by Suntech, 18.56 percent on imports of Trina Solar, and 26.89 percent on imports of most other Chinese producers.

SolarWorld commended the U.S. Department of Commerce’s determination and noted that most of the firms will pay combined duties of about 47 percent, effective immediately.

Here’s a statement from the winner of the case:

“We and our workers are very gratified to hear that the U.S. government once again has moved to block foreign government interference in our economy and clear the way for the domestic production industry to be able to compete on a level playing field,” said Mukesh Dulani, president of SolarWorld Industries America. “We should not have to compete with dumped imports or the Chinese government. Today’s actions should help the U.S. solar manufacturing industry to expand and innovate.”

Wiley Rein’s International Trade Practice was the law group involved in this case.

At the time of the subsidy decision, CASE, an industry group representing mostly downstream U.S. players, pleaded for a settlement and released the following statement:

“The best path forward continues to be a negotiated settlement between the U.S. and Chinese governments to end this dispute and create the conditions for growth. But to achieve this, SolarWorld must come to the table and work with the industry to find a settlement that benefits the entire global supply chain. We ask the White House to help by convening the parties for true negotiations, and we urge SolarWorld to make its conditions known and join the rest of the U.S. industry in support of the Solar Energy Industries Association (SEIA) proposal.”

SEIA also called for a negotiated settlement, suggesting, “It’s time to end this needless litigation with a negotiated solution that addresses SolarWorld’s trade allegations while ensuring the continued growth of the U.S. solar market.”

The organization characterized today’s action as “a further escalation of the solar trade war with China” and reiterated its call for a negotiated settlement.

“If there’s a silver lining to today’s announcement,” said SEIA head Rhone Resch, “it’s the fact that the U.S. and Chinese governments, SolarWorld, and Chinese manufacturers now have a brief window of opportunity to move forward on settlement discussions.”

In 2013, imports of certain crystalline silicon photovoltaic products from China and Taiwan were valued at an estimated $1.5 billion and $656.8 million, respectively.

What’s the impact of the decision on the U.S. market?

“The current scope of the 2014 case will likely result in a variety of strategiesadopted by Chinese module vendors to continue serving the U.S. solar market,” said Shyam Mehta, Lead Upstream Analyst at GTM Research and co-author of a recent report on the topic. “While the strategies vary, one constant remains across all scenarios: pricing for Chinese modules shipped to the U.S. is highly likely to increase starting in July 2014. Consequently, the primary competitive advantage of Chinese suppliers in the U.S. market — lower pricing by as much as 25 percent historically — could be greatly diminished.”

Chinese companies supplied 31 percent of the modules installed in the U.S. in 2013, and more than 50 percent in the distributed solar market, according to GTM Research. The report finds that non-Chinese suppliers are likely to gain share as a result of the erosion of Chinese price advantage in the U.S. market. Likely beneficiaries include REC, SolarWorld, Suniva and LG Solar in the distributed solar market, and First Solar in the utility market.

Yingli, the world’s largest solar panel manufacturer reacts: “Unfortunately, this determination will increase the price of solar energy in America, severely jeopardizing the U.S. solar industry’s tremendous progress in cost-competitiveness and affordability when compared with traditional energy sources,” commented Robert Petrina, Managing Director of Yingli Green Energy Americas. “While we have fully cooperated throughout this investigation and were prepared for this preliminary decision, we ask that our industry comes together to resolve this dispute and focus on the growth of the promising American market. We remain committed to the U.S. solar market and will continue to support our partners and projects.”

REC Group’s Senior VP in the U.S., Arndt Lutz, stated, “Although REC strongly believes in open and fair competition, and that solar ‘trade wars’ are not in the interests of the solar manufacturers, project developers and installers, or end consumers, we are not surprised by the Department of Commerce’s latest rulings. I would say that the level of the preliminary dumping margins levied against the Chinese and Taiwanese companies is on the high end of my expectations.”

While a 7 percent to 20 percent increase in module prices from Chinese suppliers will have reverberating effects throughout the U.S. solar market, it will be most disruptive in the highly cost-sensitive utility solar market. GTM Research expects some projects to seek alternate module suppliers, while others may fail entirely.

“Unless the Department of Commerce revises the scope prior to its final determination, there is no question that tariffs imposed in this case will have a larger impact than those already in place from the 2012 ruling,” said Shayle Kann, Senior Vice President at GTM Research and the report’s co-author. “SolarCity, for example, has already announced a 100-megawatt supply deal with REC Group, while RGS Energy has done the same with SolarWorld. This portends a broader shift in the pricing and competitive landscape for U.S. solar module.” (For more information about this report, visit this page.)

Regarding today’s decision, Credit Suisse Equity Research analysts claim, “SolarCity is relatively immune, as solar module supply has been secured at reasonable rates and modules are available for late 2014 and into 2015 at comparable price (~$0.75 per watt) without exposure to trade outcomes.”

Commerce is scheduled to announce its final decision on or about December 16, 2014.

Source: Greentech Media. Reproduced with permission.