U.S. Hits China Solar Firms
Tariffs on Solar Products From China and Taiwan
Updated Aug. 1, 2014
Solar panels in the Xinsheng Park in Taipei, Taiwan, on 17 March 2014. European Pressphoto Agency
NEW DELH—The U.S. is shaking up the global solar-equipment industry by imposing heavy antidumping tariffs on Chinese makers, a move that is benefiting not just producers at home but also those operating in Asia and encouraging them to expand.
The Commerce Department has issued preliminary tariffs on solar products of around 20% to 40% from China and Taiwan, saying they were sold too cheaply to U.S. buyers. The panels from China had flooded the market and pushed down global prices, but with prices now rising from Chinese importers as they have to deposit money in U.S. escrow accounts until the preliminary findings are confirmed, buyers are turning elsewhere.
One beneficiary is Norway-based REC Group that produces solar equipment in Singapore and now forecasts sales to the U.S. market growing to 20% of their total sales, from to 7%-8% previously.
"We are getting more and more attention from U.S. companies seeking fair-trade, high-quality solar panels," says Arnd Lutz, senior vice president of REC Group. "We are now shipping more to the U.S., compared to previous years."
The company is planning to spend up to $100 million expanding its Singapore factory so it can produce solar cells with a capacity of 1.3 gigawatts over the next two years, from one gigawatt currently.
In 2012, the U.S. had imposed antidumping tariffs against China, but Chinese manufacturers skirted this by setting up manufacturing bases in Taiwan. That left U.S. imports of solar products from China worth $1.5 billion in 2013, half the level of 2011, but imports from Taiwan more than doubled to $657 million over the period, according to U.S. data.
Another leading solar equipment maker, German-headquartered Hanwha Q Cells, emphasized the advantage of having a production facility in Malaysia because costs are cheaper there due to lower wages.
"It puts us in the position to flexibly deal with changing market conditions and reliably address different local customer requirements," said Jochen Endle, director of corporate communications at Q Cells. "Thanks to this set up, Hanwha can offer products free of antidumping duties to our customers in the U.S."
He said their company was in the process of expanding the plant's capacity in Malaysia to 1.1 gigawatts from 900 megawatts. The company emphasized their decision for capacity expansion reflected an "overall positive outlook."
An analyst said the U.S. decision would help manufacturers outside of China and Taiwan as they operated on higher costs and lower margins compared with Chinese manufacturers.
"Now, Chinese companies' landed price of solar equipment in the U.S. has gone up by 10%-15%," say Nitin Kumar, Singapore-based executive director with Nomura Research. "To that extent, the pressure on margins of companies outside of China becomes less."
He said better margins are bound to boost the expansion plans of manufacturing companies outside of China and Taiwan.
To skirt the antidumping duties in the U.S., some Chinese companies may decide to set up manufacturing bases in countries such as India, said Mr. Kumar.
"Whether Chinese companies set up manufacturing bases outside of China for exports to the U.S. will be a function of how big is the U.S. market," he said.
Some Chinese manufacturers have been inquiring about setting up manufacturing bases in India, as it will help them to get around U.S. antidumping tariffs and the similar import duties set by New Delhi recently against solar equipment imported from China, the U.S. and other countries, they said.
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