Tentative US-China deal heralds trade reprieve for PV polysilicon makers

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
US president Donald Trump faces Chinese counterpart Xi Jinping at the G20 summit of July 2017 (Image credit: The White House / Flickr)

The easing of economic tensions between the US and China is set to throw a lifeline to the solar industry, bringing some respite to the sector after years of back-and-forth trade tariffs and levies.

US polysilicon makers will be allowed to export their products to China in greater volumes under the first phase of a trade agreement between the US administration of president Donald Trump and its Chinese counterpart, headed up by president Xi Jinping.

The new deal agreed by both sides – a rapprochement after years of entrenched US-China trade conflict – sees China commit to taking at least US$200 billion more in US exports throughout 2020 and 2021, with 2017’s export figures set as the baseline.

Released this week, the agreement text states this US$200 billion in added US exports will span agriculture, energy, services but also manufactured goods. Within this last category, the document lists “solar-grade polysilicon” among the US products set to be sold to China in greater amounts.

Under a different manufactured goods sub-category – electrical equipment and machinery – the US and China also list “semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels.”

The exact volumes of US solar goods that China will be accepting in 2020 and 2021 remain unclear but the agreement does specify that across all manufactured goods sub-categories, Beijing will be importing a least US$77.7 billion more over the two-year period.

The lifeline to US polysilicon makers was welcomed by the country’s solar industry – represented by association SEIA, which hailed this week’s deal as a “great development” – but also the manufacturers themselves, including REC Silicon, Hemlock Semiconductors and Wacker Polysilicon.

In a statement, the trio described themselves as the US’ “three remaining” polysilicon makers and thanked President Trump and US negotiators for securing the import concession from China. The hope, Hemlock CEO Mark Bassett said, is that the move will result in a “more level playing field”.

The US-China polysilicon trade spat dates back to the early 2010s, when Beijing moved to slap tariffs on imports from the market – as well as from the EU – even as it heaped subsidies on its own manufacturers.

Over the years, US makers have complained about the impacts of China’s two-pronged protectionist push. REC Silicon links tariffs to its “forced” closure of a US$1.7 billion polysilicon plant in the US, while Wacker has blamed China’s subsidies for a €750 million impairment charge it took last year.

Rare olive branch fuels hopes of future thawing of US-China PV trade tensions

Analysis by José Rojo, senior reporter at PV Tech

This week’s 96-page agreement marks a rare olive branch after months of escalating solar trade tensions between US’ Trump and China’s Jinping, a détente of sorts after high-profile spats before the World Trade Organisation (WTO) and dramatic u-turns over the US’ Section 201 tariffs.

Given that China is thought to represent 92% of global polysilicon demand, it is hard to read Beijing’s acceptance of increased US imports as anything other than good news for the industry. However, as noted by REC and others, much will rest on how China implements a deal for now only on paper.

The Phase 1 agreement might only be an initial stab at defusing deep-seated trade conflicts but many, based on the reactions seen by PV Tech, are hoping it will herald something more durable: a redefinition of the US-China interaction from tit-for-tat clashes to common-sense cooperation.

Such a subtext was obvious in the statements of the US Chamber of Commerce – which described the deal as a “new chapter” in US-China relations – but also US PV body SEIA, which made it clear the real prize lies not in this specific document but in the eventual thawing of solar trade restrictions.

As SEIA’s VP of market strategy put it: “We hope this deal will start a much-needed discussion with the administration about how we can scale back the tariffs on solar products more broadly, while continuing to build American solar manufacturing.”

Given Trump’s penchant for volatility, it is anybody’s guess whether he will stick to this initial deal in the long run, let alone use it as basis to further relax PV trade barriers. His latest actions on the global stage, the Iran row included, suggest long-term forecasts of how the president will turn are of no use.

Observers attempting to divine the US administration’s next move on the key issue for solar – the Section 201 import tariffs, which the industry wants to bring down – may not be reassured by its actions late last year, including the insistence on retaining bifacial tariffs despite court setbacks.

For some, a silver lining could lie in the fact that US solar looks set to prosper whether Trump rethinks its protectionist stance or not. In a separate development this week, the government’s own stats predicted the industry will go on to install a record 18.5GWac US-wide this year.

See here to read the US-China agreement text in full

Read Next

June 23, 2021
Annual investment in solar and wind generation in the Asia Pacific region could double to US$1.3 trillion by 2030 compared to the previous decade, with policy targets and cost declines boosting growth, according to research firm Wood Mackenzie.
June 23, 2021
Polysilicon manufacturer Daqo New Energy is set to proceed with its initial public offering after completing its registration with the China Securities Regulatory Commission (CSRC).
June 23, 2021
Finlay Colville, head of market research at PV Tech Research, explores how solar PV has become dependent on low-cost manufacturing, facilitating a dominance by China-based players, and how the industry could engage with current scrutiny of solar’s supply chain.
PV Tech Premium
June 22, 2021
Amidst surging materials costs, the solar industry needs to avoid any “gaming” on price between upstream and downstream sectors as it could be “very dangerous for both sides”. Leo Xiang, general manager at Jiang Tai Insurance Brokers’ energy department, speaks to PV Tech about the potential remedies to the situation.
June 21, 2021
‘Solar Module Super League’ (SMSL) members JinkoSolar and JA Solar are to invest in polysilicon provider Xinte Energy’s 100,000 ton facility in Inner Mongolia, receiving priority access to the polysilicon produced as a result.
PV Tech Premium
June 21, 2021
The cost of insuring operational solar farms has skyrocketed over the course of the year, triggered by carriers rethinking their approaches to natural catastrophes and other extreme weather events. This has placed additional importance on mitigation strategies. Kevin Christy, COO for North America at Lightsource bp, details how the solar developer has adapted its strategy in the field.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
July 6, 2021
Solar Media Events
August 24, 2021
Solar Media Events, Upcoming Webinars
October 6, 2021