Reduced US-China tariff rates weaken SolarWorld’s negotiating position, says Roth Capital

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

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%.

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.

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

PV Tech Premium
January 18, 2022
olar project developer Eco Energy World is aiming to “aggressively” grow its US PV pipeline after formally entering the market last week and intends to replicate the cheaper engineering, procurement and construction (EPC) costs it sees in Europe in the country. PV Tech Premium speaks to CEO Svante Kumlin to find out more.
January 18, 2022
PV inverter specialist Huayu New Energy has upgraded its portfolio of single-module microinverters, launching them in the Brazilian market this month.
January 18, 2022
Trina Solar’s tracker manufacturing unit TrinaTracker has launched a 1P single-row tracker, dubbed Vanguard.
January 18, 2022
Spanish solar company Soltec Power Holdings, through its subsidiary Powertis, has sold a controlling stake in 421MW of its solar PV projects and 90MW of energy storage in Italy to German investment firm Aquila Capital under a co-development agreement.
January 18, 2022
Solar tracker manufacturer Soltec has signed contracts to supply 610MW of its SF7 bifacial trackers to Enel Green Power for use in two PV plants in Peru and Colombia.
January 18, 2022
Prefabricated solar solutions manufacturer 5B is looking to improve the scalability and cost of its technology through an AU$33.4 million (US$24 million) innovation programme and support from the Australian Renewable Energy Agency (ARENA).

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal