Potentially reduced anti-dumping tariffs in the US could strengthen Chinese firms’ position at the negotiating table in “ongoing” talks to settle the latest dispute, according to ROTH Capital.
At the end of last week the US Department of Commerce reduced the tariffs from the 2012 trade case for around 20 companies on modules shipped during a limited period. A final review of tariffs is expected in April, or June if there is an extension granted. The combined 2012 anti-dumping and anti-subsidy tariff rate could effectively fall from 31% to 18%.
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Based on production costs of US$0.53/W including shipping, Roth estimated profit margins could rise to around 7% for Chinese firms. This would reduce average selling prices (ASPs), which would ultimately weaken SolarWorld’s position in talks to settle the latest disagreement.
“We believe the potential tariff change represents a meaningful improvement for the economic outlook of the US market. While the 2014 trade case, in our view, is not immediately relevant, companies are actively shipping under the 2012 tariff regime,” a Roth Capital research note said. “As for the impact of these preliminary results on the ongoing US/China negotiations for an overall compromise, we believe the lower tariffs provide the Chinese with greater leverage in the discussions. If the ~18% tariff becomes final, we could see US ASPs erode modestly given the margin improvement, thereby making it more challenging for SolarWorld to defend the higher minimum import prices that it currently requires.”
In response, Mukesh Dulani, US president of SolarWorld told PV Tech: “The findings by Commerce are only preliminary results of the annual review of the orders, and SolarWorld will carefully scrutinise them and work to ensure that the final results reflect all of China’s unfair trade practices. Regardless, the preliminary subsidy numbers increased, and both the underlying dumping and subsidy orders will stay in place for at least five years. SolarWorld remains focused on the goal of restoring fair trade to the US solar market, and any negotiated settlement must ensure that all sectors of US solar, including manufacturing, will be able to thrive in a growing, competitive marketplace.”
Another firm has predicted more dramatic increases in profit margins for some Chinese companies. Module manufacturers could see profit margins in the US rise to as much as 15% if the new tariff rates become final, according to Taiwanese-based EnergyTrend.
EnergyTrend estimated that they could achieve a cost of US$0.50/W for modules imported into the States.
EnergyTrend research manager Jason Huang said the change would also make Taiwanese cell manufacturers less competitive.
“With the drop in the tariff rate, vertically integrated Chinese manufacturers will become more competitive in the US market than before due to their scale,” he said.
