The US Department of Commerce's investigation of solar cell double-reverse investigations in China began in October 2011, and German photovoltaic manufacturer Solar World took the lead in submitting a lawsuit against the Chinese PV manufacturer to the US Department of Commerce. The preliminary results of the case include the countervailing duties announced in March this year and the anti-dumping duties announced last month. Some of the Chinese battery manufacturers are facing an anti-dumping duty rate of 31%, while others are as high as 249%.
The above results have led to extensive discussions and dialogues in the photovoltaic industry, with statements from all parties and a quick and unpredictable adjustment strategy. I will summarize and discuss some of the possible outcomes again.
Bear tariff
Although China's solar PV manufacturers may not pay this part of the punitive tariffs in the future, in the short term, these tariffs will have a huge impact on the financial situation of Chinese solar PV manufacturers. Since the US Department of Commerce has determined that the anti-dumping tariff needs to be prosecuted for 90 days, China's solar cells and components exported to the United States from February to May will not be able to escape the taxation. This will have a negative impact on the revenue and expenditure of China's solar PV manufacturers in the first and second quarters of 2012. IMS Research expects Chinese battery manufacturers to pay about $100 million in tariffs for products sold in the United States within 90 days. This is aggravating the already difficult PV manufacturers.
Avoidance avoidance
It is undeniable that China has sold a large number of PV modules to the United States within 90 days of the prosecution period. However, in a highly competitive and price-sensitive industry such as PV, Chinese manufacturers do not intend to pay this tariff or raise prices. We can get a glimpse of the statement from Suntech’s previous conference call. Suntech’s CEO Shi Zhengrong said in a conference call, “Our products currently produced in the US and sold to the United States are not covered by these tariffs.â€
Since the above tariffs are only defined for the origin of photovoltaic cells, manufacturers will undoubtedly look for alternatives to bypass tariffs. One of the clear strategies is to assemble photovoltaic modules from batteries produced outside of mainland China for the US market. Taiwan's PV manufacturers are likely to assume the role of providing low-cost batteries. IMS Research expects Taiwan battery manufacturers to usher in a wave of strong demand, driving Taiwan's profits to rise.
Chinese PV manufacturers may import more than 1 GW of solar cells in 2012 in order to circumvent US tariffs. This means that in the short term, the capacity of China's battery production line will decline. For manufacturers planning to expand their battery and component capacity, they will also adjust their strategies to make component capacity exceed battery capacity.
For Chinese solar manufacturers that are optimistic about the US PV market, another viable but less likely option is to seek opportunities to acquire or build production bases outside of mainland China. Although it is difficult to make such a large-scale investment in the current industry situation, there are still opportunities for acquisition.
Give up the US market
Almost all analyses consistently believe that the United States will become the world's "biggest" and "most important" solar market in the future. The US market is expected to account for 10% of global PV installed capacity in 2012 and will grow at a rate of 15% per year over the next four years. However, other emerging markets also have huge opportunities. For example, China's PV market has surpassed the US in 2011, and it is widely expected that the Chinese market will continue to grow in the next five years. For Chinese PV manufacturers that have not yet established a solid channel in the US, exiting the US market to focus on other markets is also an option.
U.S. punitive tariffs will also delay the launch of many new technologies into the US market. Many PV manufacturers in China have developed or are developing a series of high efficiency monocrystalline silicon solar cells. These products are mainly for space-constrained applications, such as residential roofs or small commercial building roofs, which account for more than 25% of the US solar market, and once US tariffs are implemented, these high-efficiency products will miss the US in the short term. market.
Counterattack
For the solar photovoltaic industry, the biggest danger is that other parts of the world follow the example of the United States to introduce similar protective tariffs. At the moment, news about similar regulations in Europe or elsewhere is still rumored. But these rumors may indeed become reality. If trade barriers are widely adopted, the market will be more complicated, the competition situation will be further severe, and manufacturers' upstream strategies and growth will face challenges.
In addition, there are rumors in the market that China will impose similar retaliatory tariffs on US companies. Since 25% of the world's polysilicon production capacity is located in the United States, 75% of the demand is located in China. If China takes retaliatory measures against US polysilicon, the situation between China and the United States will be rewritten.
What changes will the tariff bring? Is it important?
If Chinese manufacturers use the methods in the above analysis to circumvent US double-anti-tariffs, the cost of components exported from China to the US will increase slightly, so prices may rise slightly. In addition, due to the need for Chinese manufacturers to negotiate alternative tariff agreements with the United States, the Chinese PV product supply chain in the US market may be temporarily strained, and some projects will be postponed. In addition, if the United States further raises the tax rate in the double-reverse final review, then China's first-tier manufacturers will face financing problems. China's PV products currently occupy half of the US market. If tariffs are implemented, the growth trend of Chinese manufacturers in the US will gradually slow down in the future. IMS Research expects the US installed capacity to drop by more than 10% in 2012 to around 3GW.
The US “double-reverse†tariff response and possible consequences constitute a complex network. However, as major manufacturers can circumvent US tariffs without increasing too much cost, it is expected that “tax-free†components similar to those made in China will soon appear in the US market. In short, the "double opposition" of the United States has limited impact on market development.
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