Nov 25, 2011 - The USA and China have been investigating anti-dumping trade practices against each other for over a month now and their fierce mutual accusations are making analysts think whether the photovoltaic (PV) industry has not went too far with the sharp price reductions across the value chain.
by Mariyana Yaneva
Competition from China has long been cited as a scarecrow for European and US solar panel makers but only last month a consortium of seven US crystalline silicon solar panel developers, led by the largest US producer of crystalline silicon photovoltaics -- SolarWorld Industries America Inc -- took these talks to another level and filed a trade case against China's solar industry.
The so called Coalition for American Solar Manufacturing (CASM) filed petitions with the US Department of Commerce and the International Trade Commission accusing China of both illegally subsidising production of solar cells and dumping crystalline silicon cells into the US market.
The group of investors has also requested that the US government should impose duties of over 100% on the imports of solar cells and modules currently worth more than USD 1.6 billion (EUR 1.2bn) a year.
Speaking to reporters at the launch of the petition, Gordon Brinser, president of SolarWorld Industries Americas Inc, the US arm of German Solarworld (ETR:SWV), said, "China’s illegal actions are undercutting fair market value and threatening to eliminate America’s solar manufacturing. (...) As long as China is allowed to continue cheating, there is no way America can expect to compete in the solar energy race."
Chinese companies did not sit and watch.
Chinese manufacturers have asked their Ministry of Commerce to launch a dumping and subsidy investigation into sales of US polysilicon in China, according to China Daily. "Foreign countries, led by the United States, have dumped 47,500 tonnes of polysilicon in China in 2010, 20,000 tonnes more than the previous year, according to statistics from the Alliance," the China Photovoltaic Industry Alliance (CPIA) said.
Even within the US opinions on the matter differed. The Coalition for Affordable Solar (CASE), another US organisation comprised of MEMC and a number of downstream players, including Carbon War Room, Solar City, SolarFirst, Sungevity, Suntech America, SunRun, Trina Solar, Verengo, Yingli Americas, Recurrent Energy, et al., disagrees with the trade action as a strategy.
Speaking for CASE, Kevin S. Lapidus, senior VP and general counsel at SunEdison, said that the SolarWorld case would be harmful to the US solar market. Lapidus noted that more than half the solar employment picture is in the installation and downstream portion of the value chain -- not in cell or module manufacturing.
"Price declines have brought us close to grid parity. The imposition of tariffs will be a setback to the US solar industry," he also said.
So, entities in the US are trying to keep China from allegedly dumping PV panels in the US and entities in China are looking to keep the US from dumping polysilicon in China. Who has the most to lose ?
As an analysis in US Greentechmedia points out: "If China encounters trade friction in the US, they can sell their panels elsewhere. If the US can't sell polysilicon to China, there aren't a lot of alternatives."
There is a negative effect from this trade row that will be well visible on both sides of the ocean, though.
The larger part of solar module producers made massive inventory write-downs in the third quarter of the year due to sharp price reductions across the PV value chain.
Even Chinese Suntech, Trina, LDK, JA and Canadian Solar lost a combined USD 364.9 million, compared to a combined profit of USD 310.6 million during the third quarter of 2010.
With some analysts estimating next year's global demand for PV at 21 to 25 GW while the production capacity for solar modules will hit 50 GW by the end of 2011, the imbalance between supply and demand becomes too great and consolidation within the sector seems inevitable. Small companies, uncompetitive ones and poorly funded ones will not survive this structural adjustment. On the other hand, firms operating globally and vertically integrated stand a very good chance to come out strengthened. We just have to wait and see which ones.
(USD 1.0 = EUR 0.750)
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