China solar companies didn't think they'd get off the hook that easily, did they? Washington is considering adding more trade tariffs on photovoltaic (PV) products made in China all thanks to a Hillsboro, Oregon based company that got the U.S. government to listen back in 2011. The drama continues.
SolarWorld is the largest solar panel maker in the U.S., but for years now, the title for the world's leading PV manufacturers belongs to China. It took the top spot away from Germany. Anti-dumping charges from the E.U. and U.S. have put a dent in the industry, but hasn't changed the fact that China still rules this market as both producer and future consumer.
On Wednesday, China's Ministry of Commerce said on its Chinese language website that Washington's latest plan to impose more punitive duties on PV panels will worsen trade relations between the two economic super powers. The Ministry said it was "strongly dissatisfied" with talks of increasing the tariff. The idea to increase the tariff came up again this winter, but it is unclear whether or not SolarWorld had a hand in it this time.
Oregon based SolarWorld sparked a three year battled against Chinese solar panel makers. The U.S. government is threatening to increase tariffs against SolarWorld's rivals yet again. China solar stocks feel the pain.
The U.S. Commerce Department on Tuesday set preliminary rates on imported PV products from China, signaling that it may increase tariffs. Tariffs were raised back in 2012. Preliminary rates are non-official tax duties on imports. They do not mean Commerce will ultimately make them official.
Extra duties will be imposed if both the Commerce Department and the U.S. International Trade Commission make affirmative final rulings, scheduled for Aug. 18 and Oct. 3, respectively.
China is both the world's largest supplier of renewable energy technologies. Over the next two decades, it will install more wind, solar, and hydropower capacity than any other country. As such it will remain a critical market for U.S. exporters well into the future.
Yet despite that opportunity for companies like SolarWorld, the Chinese renewable energy market is difficult for American exporters to enter. Meanwhile the U.S. market has been opened to the Chinese for years, much to the dismay of its competitors.
China was exporting an increasing number of PV panels to the U.S. Supply eventually beat out demand, and prices for solar products fell to a point where U.S. companies were getting squeezed out by China. They could not compete on margin.
In October 2011, SolarWorld had just about enough of China and took its fight to Washington. On Oct. 19, it filed anti-dumping and countervailing duty petitions against China's solar industry. Earlier that year, Massachusetts-based solar panel maker Evergreen fired 800 workers and shipped its manufacturing base to Wuhan, China.
By November 2011, the U.S. government began an investigation into China solar subsidies and anti-dumping. This meant the International Trade Commission was looking into whether China's low cost, zero down business loans were an unfair subsidy and whether that enabled PV makers to sell into the U.S. below market rates.
In March, the U.S. Department of Commerce increased tariffs on China PV panels to 4.7% from 2.9% based on findings that China was heavily subsidizing the industry. Two months later, the U.S. announced a preliminary decision to impose anti-dumping tariffs of 31.14% to 249.96% on imported Chinese solar panels.
SolarWorld saw the light. And Europeans did too. The trade group E.U. ProSun lobbied the European Commission to investigate China solar like the Americans. A year later, in May 2013, Europe joined the American chorus and slapped punitive trade tariffs on China solar. By then, China solar companies were already in trouble. They felt the pinch of China's tighter lending practices, mismanagement, and a European financial crisis that cut solar spending. This became one big cloudy day for Suntech Power Holdings, which declared bankruptcy in May. It was the first publicly traded Chinese company ever to file for bankruptcy protection.
The Chinese PV industry has been recovering since the second half of 2013 but encountered this unexpected second U.S. investigation in February.
On Wednesday, stocks of all the major China solar makers were in the red. After market hours looked just as bad for some.
Trina Solar fell 4.47% and is down 3.95% after hours. ReneSolar fell 3.9% and is down around 1% in the after market. Yingli settled 4.07% lower. LDK Solar, now living in the speculative pink sheets, closed 7% lower. The stock continues to waste away from its Sept. 21, 2007 all time high of $68.90.
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