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The largest supplier of polysilicon, GCL-Poly Energy Holdings and Daqo New Energy Corp. have been reported to have demanded of the Chinese Ministry of Commerce (MOFCOM) to bear down on US manufacturers as the US Department on Commerce did to Asian manufacturers last month.
With the potential to escalate the trade dispute between two of the largest economies in the world further, MOFCOM appears to be playing this game cautiously. The Ministry is yet to accept the case, according to unidentified sources.
“China’s Ministry of Commerce will consider Sino-US trade to determine whether to accept the complaints,” Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, said in an interview. She told Chinese publication Economic Daily News that, “GCL-Poly, LDK Solar, Daqo New Energy and other larger enterprises have been involved in the application”.
Sino-US solar trade resulted in the Asian nation purchasing 26,000 tons of polysilicon in the first quarter of 2012, reports Beijing-based Bloomberg New Energy Finance. The US supplied 44.3% of the imports valued at US$730 million.
According to trade group China Nonferrous Metals Industrial Association, the current spot price of domestic polysilicon is as much as US$28 per kilogram, while the international price is US$26 per kilogram.
Hongling was asked by Economic Daily News whether the application could be viewed as a counter-attack: “There are reasons, but this is not the decisive factor.”
On May 25, what could only be interpreted as retaliatory measures were initiated, were initiated. Beijing filed a complaint with the World Trade Organization (WTO) alleging that US anti-subsidy measures undercut US$7.3 billion in Chinese goods, including solar panels.
US Custom and Border Protection has already begun to secure duties on imports. The Coalition for American Solar Manufacturing (CASM), a conglomerate which launched the campaign against Chinese imports last year, claim imports were down in April by 66% valued at US$70.7 million. This is compared to the previous month’s US$206 million. Polysilicon prices have plunged as output capacity has soared, particularly in China. Global production capacity is almost 300,000 tons a year, with at least 25% from Chinese manufacturers, according to New Energy Finance. Analyst Xie Chen at the Nonferrous Association said foreign competition has forced some Chinese manufacturers to halt production.
One of the accusers, GCL-Poly, makes on average 65,000 tons a year. GCL-Poly recently released proposals to build PV power plants in China. The Hong Kong-based company recently made plans to move downstream, having partnered with Winsun New Energy and Shunfeng Photovoltaic for projects in both China and Europe.
“Recent events, including the release of the US Commerce Department’s preliminary decision on imposing tariffs, will cause the industry to suffer a setback in terms of development, but challenges also offer new opportunities.
Photovoltaic manufacturers are looking to push forward by improving panel efficiency and reducing costs through technological innovation, while advancing management through the reconstruction of business models,” added Zhu Gongshan, president of GCL.
Daqo New Energy’s motivations to commence proceedings against US manufacturers could be linked to falling revenue and continued losses in the first quarter of 2012, despite full-capacity utilization and increased shipments of polysilicon and wafers. Based-on previously guided poly production cost reduction timelines and current spot market pricing - Daqo is fighting a losing battle to sell polysilicon above cost level through 2012 and 2013.
The small polysilicon producer reported poly shipments of approximately 964MT in the first quarter, up from 834MT in the fourth quarter of 2011. Wafer shipments also increased from 7.8MW in 4Q11 to 23.4MW in 1Q12.
“While Chinese silicon manufacturers may be keen for tariffs on silicon imports from the US, the vast majority of Chinese solar companies buy silicon and so will be fiercely opposed to any measure that increases the price,” Jenny Chase, Bloomberg New Energy Finance said.
Björn Emde from Suntech Power is in agreement, “As a global company, Suntech is of course decidedly pro-free trade and against trade barriers wherever they may present themselves worldwide. Solar PV is just too important an industry to have it pushed back by short-sighted protectionist measures. There are no winners in a trade war.”
"We at Trina strongly oppose any trade barriers for solar energy raw materials between countries as they add unnecessary costs, slow down local job growth and delay the overreaching goal of reducing reliance on fossil fuels," Mark Kingsley, the company’s chief commercial told PV-Tech.
US President Barak Obama’s hands firmly cuffed behind his back following the Solyndra saga issued the Department of Commerce to make its implacable judgement against Chinese imports of solar cells. The US has imposed anti-dumping duties at margins ranging from 31.14% to 249.96%. Previously, countervailing imports of silicon PV modules stated Chinese producers and exporters received subsidies from their government ranging between 2.9 – 4.73%.
Officially, the China Development Bank, since 2010, has made available US$47.3 billion in credit, which is yet to be fully consumed, to support the country’s wind and solar manufacturers, according to a New Energy Finance study in October 2011.
Of course, the US is not without its own domestic financial assistance. MOFCOM is currently embroiled in negotiating terms to bring six renewable energy initiatives in the US that it believes is flouting WTO rules on subsidies and countervailing measures in addition to the 1994 GATT Agreement.
GCL-Poly and Daqo have declined to comment.
