The latest anti-dumping (AD) duties set by the US Department of Commerce (DOC) has left Taiwanese producers of PV modules and solar cells considering their options.
It is the first time Taiwan-based producers have been affected by such proceedings and at least one has said it will consider establishing a manufacturing base outside of Taiwan.
The petitioner in the case, SolarWorld, has repeatedly said that a “loophole” had existed since the first AD case that allowed Chinese module producers to use Taiwanese solar cells in modules destined for the US market to avoid duties. However, the original AD case put forward by SolarWorld did not include solar cells made in Taiwan.
According to the preliminary DOC ruling, mandatory respondents Gintech Energy and Motech Industries were found to have been selling products into the US ‘at less than its fair value'. As a result, Gintech Energy would receive preliminary dumping margins of 27.59%, while Motech Industries would receive dumping margins of 44.18%. Motech Industries also has a relatively small module assembly plant in the US.
All other Taiwan-based PV producers would receive dumping margins of 35.89%.
The next step is for DOC to instruct US Customs and Border Protection to require cash deposits based on the preliminary rates as adjusted for export and domestic subsidies found in the companion countervailing duty (CVD) investigation.
Taiwan producer’s response
As a result of the DOC investigation, a number of Taiwanese producers have issued statements in response to the preliminary duties, including Gintech Energy and Motech Industries.
Solar cell and module manufacturer, Gintech Energy noted that it had been imposed with the lowest dumping margins, compared to its Taiwan peers. The company revealed that it was already actively engaged in seeking greater geographical market mix to limit the impact on sales from the ruling.
The company claimed that previous product shipments would not impact the company as customers would absorb retrospective duties.
Gintech Energy also said that it would co-operate fully with the US in respect to forthcoming spot checks and documentation ongoing in respect to any anti-dumping information.
Motech Industries acknowledged it would be liable to dumping margins of 44.18% and its China subsidiary, Motech (Suzhou) Renewable Energy would incur penalties of 42.33%.
Like Gintech Energy, Motech Industries noted that it had already been diversifying into other markets to limit the risk from the DOC investigation and said that there would be “no significant impact on [the] Company’s financial operations".
Motech Industries said that revenue in 2013 attributed to business in the US totalled NT$2.27 billion (US$75.7 million). However, revenue from the US in the first-half of 2014 had only totalled (US$9 million), or 10.6% and 2.4% of total consolidated revenues, respectively.
The company also said that it would co-operate with US officials in the hope of “fair and reasonable final determination while the US conducts an on-site verification in Taiwan".
The world's largest merchant solar cell producer, Neo Solar Power (NSP) responded by acknowledging that it would receive preliminary dumping margins of 35.89%.
The company stated that shipment volume to the US in June only accounted for around 12% of revenue for the month and that in the whole of 2013, US shipments accounted for around 6% of total revenue. In the first half of 2014, US shipments accounted for around 11% of revenue.
NSP had recently reported June 2014 revenue of NT$2,208 million, down 15.82% compared to the previous month.
However, despite saying the company was “aggressively seeking orders from other regions,” NSP was considering different supply strategies, which included the “possibility to set up plant overseas to respond the constraints of [the] US market".
Solar cell producer, E-Ton Solar Technology said its preliminary duty rate was 35.89%, while maintaining that in the first-half of 2014, shipments to the US only accounted for 1.09% of revenue, mitigating any material financial impact on the company. However, in 2013 shipments to the US accounted for 9.59% of annual revenue.
Solar cell producer, Solartech Energy Corp said it would receive preliminary dumping margins of 35.89%. The company noted that it didn’t expect any material impact due to 2013 revenue attributed to the US being only 0.2% and 0.3% in the first-half of 2014.
Despite announcements from many of the Taiwanese producers attempting to profile limited impact of the DOC judgement, Taiwan-based market research firm, EnergyTrend said that producers face serious business challenges.
“The gap between Taiwan’s and China’s tax rates was small, which constrained Taiwan to increase its competiveness. Instead, it’s a frustration to Taiwan’s PV industry as Taiwan will lose many orders transferred from Chinese manufacturers. Overall, it will be a huge challenge to relevant makers in the future,” said Arthur Hsu, research manager of EnergyTrend, a subsidiary of Taiwan-based market intelligence firm TrendForce.
According to Hsu, Taiwan PV manufacturers are unlikely to be able to absorb the AD tariffs simply through adjusting procurement or production processes, especially since many produce high-efficiency solar cells and modules that incur higher production costs than lower-efficiency products from China.
EnergyTrend said that as a result of the DOC ruling Motech Industries could be reconsidering its involvement in module assembly in the US.
"Taiwan’s high-efficiency product development will be closely linked to its future outlook in North America and it becomes crucial for Taiwanese PV companies to accelerate progresses of global deployment to maintain their market share in North America. Among all, Motech, which was imposed the highest tax rates, may reconsider its role in North America,” added Hsu.