China Solar Trade War Analysis & Fact Sheet

May 21st, 2012 by Zachary Shahan

GTM Research recently provided a short analysis of the U.S. Department of Commerce (DOC) preliminary ruling on Chinese solar imports. Here’s the bulk of that post, followed by the DOC fact sheet on the ruling, also via GTM (click on the images and then click them again on the next page to enlarge, or hold down ‘ctrl’ or ‘command’ and click the ‘+’ key):

The following are the anti-dumping tariffs handed down in the ruling:

Suntech: 31.22 percent
Trina: 31.14 percent
Named Chinese firms: 31.18 percent
Firms that did not provide info to Dept. of Commerce: 249.96 percent

These anti-dumping tariffs will be compounded by the countervailing duties that the DOC levied on March 20. The countervailing duties are listed below:

Suntech: 2.90 percent
Trina: 4.73 percent
Everyone else: 3.59 percent

The following is a series of comments from GTM Research’s Senior Analyst, Shyam Mehta on how the tariffs will affect Chinese suppliers in the U.S.

“While the margins are not as high as those seen in many previous U.S.-China antidumping cases (electrical blankets, steel grating), they are certainly much higher than Chinese manufacturers would have hoped for,” said Mehta. “Stacked onto the margins for countervailing duties, they amount to levels of 35 percent to 36 percent, which is significant.”
“Keep in mind that this is a preliminary decision. We expect Chinese manufacturers and CASE representatives to contest the findings in the days ahead.”
“The margins were obviously driven in part by the Department of Commerce’s choice of the ‘proxy economy’ to estimate costs, as China is considered a ‘non-market economy.’”
“At these margins, China-based manufacturers would certainly have to raise U.S. prices to turn a profit. It is not feasible for them to maintain prices at tariff-free levels and still be profitable. In the short term, this is likely to lead to module price increases in the U.S. which would serve to dampen demand and installation growth. If the Chinese were to absorb the tariff, it would place their costs close to parity with many U.S.-based suppliers.”“However, Chinese firms are hardly likely to stand still. Broadly speaking, they have two strategies: set up cell manufacturing outside China, or use the tolling services of Taiwan-based suppliers to turn wafers into cells there, and then assemble the modules in China. Both strategies would allow the Chinese to bypass import tariffs. We estimate that tolling cells to Taiwanese firms would increase Chinese costs by 6 percent to 12 percent, which is meaningful but manageable.”
“Given this, we do expect that the decision will result in at least incremental investment in domestic manufacturing by Chinese firms. However, there are other, lower-cost manufacturing locations that these firms could set up manufacturing in, such as Mexico and Taiwan, for example that would still allow them to price their modules below that of U.S.-based suppliers. Therefore, we see the impact of this decision on U.S. manufacturing as positive, but spurring limited investment in the future and likely only temporary relief for existing U.S.-based suppliers.”

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Tags: department of commerce, department of commerce solar, department of commerce solar trade case, department of commerce solar trade ruling, doc, quickies, solar trade case, solar trade war, solar trade war china, solar trade war ruling

About the Author

Zachary Shahan spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.