Trade War: EU-China dispute ‘may not be fully resolvable’ says EnergyTrend

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The EU-China trade dispute may not be fully resolvable, even in the long term, according to EnergyTrend, the green energy division of market analysis specialists TrendForce. However, a price war, with module manufacturers slashing costs, would be a less viable solution to economic worries than spreading investment and trade over a range of markets.

Ultimately, the trade dispute will have less material impact on the solar power industry than growth in emerging markets, say EnergyTrend. The market intelligence provider asserted the view that finding new opportunities in markets such as Korea and Taiwan would be of more interest to the PV industry than trying to squeeze the best margins out of EU-China trade.

The settlement that was reached between the EU and China would be likely to act as intended, providing barriers to entry into the EU market and forcing first tier module makers to become more competitive on product and service quality than simply on lowering prices, the research claimed. EnergyTrend went on to say that while this is ongoing, first tier manufacturers are turning their attention to building factories overseas and looking for export opportunities, especially in emerging markets.

PV Tech recently revealed that Chinese manufacturers trying to move their production operations overseas to avoid tariffs would be disappointed. The current price undertaking requires manufacturers to show economic reasons, beyond anti-dumping, for any shift in operations. EnergyTrend stated that due to fears of an ongoing price war, firms would be wiser to move production overseas in order to gain access to new markets, in case the dispute escalated in the future and rendered EU-China trade even more fraught with difficulties.

As 60% of EU-China trade quotas were set based on sample data for Chinese module shipments to Europe in the period July 2011 to March 2013, EnergyTrend believes too many Chinese module manufacturers, 94 in total, have been included in the scheme for the market to remain competitive. They went on to say that the current situation, where in its view there are too many uncompetitive firms propped up by inclusion in the quota, is not conducive to healthy industrial concentration.

EnergyTrend also stated that China would still be able to produce cells cheaply enough to compete with countries such as Taiwan in trading with Europe. Chinese first tier cells are still around US$0.03 per unit cheaper than high-efficiency cells from Taiwan, so if cells were exported to Europe from China for processing, China would retain advantage in Europe, while prices remained low enough for European firms to accept, provided they made themselves competitive elsewhere, such as in provision of systems and services and improving cell efficiency.

While Chinese firms would build factories in various overseas territories, increasing the cost of Chinese solar panels, EnergyTrend argues that for firms of every country the most concrete way to ensure survival and profitability is global expansion and acceleration in as many regions as possible at once.

The Solar Media Editor’s Podcast, launched this week, features in-depth discussion of the EU-China settlement and other key issues.

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