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China gets penal taxes on its PV offering in Europe

Posted: 22 May 2013     Print Version  Bookmark and Share

Keywords:tariff  anti-dumping  countervailing  PV manufacturing 

It will be a rough road ahead for China PV suppliers. As Europe continues its anti-dumping and countervailing investigation, TrendForce division, EnergyTrend, believes that Europe will require a punitive tariff on China's products.

The said tariff will be applied to a wide range of products. However, EnergyTrend believes that these products affected by the tariff suggest that organisations (EU ProSun and AFASE) are still defending their own interests.

The U.S. has already determined Chinese PV manufacturers' unfair competition in the market. SolarWorld, the leader of Europe's litigation, has also initiated legal proceedings against China in the U.S. If Europe's final ruling differs significantly from that of the U.S.'s, they may face considerable pressure, EnergyTrend said. On the other hand, as long as the grounds of U.S. ruling remains the same, Europe's charges against China's illegal subsidies will not be questioned, the market analyst noted.

According to EnergyTrend, the current Chinese module price quoted in the European market is between Rs.36.62/Wp-Rs.40.85/Wp (€0.52/Wp-€0.58/Wp). Based on this price, Europe's system project's return on investment will be approximately 8 per cent. Once module price increases by over 30 per cent and Germany cuts subsidy by 1.8 per cent in May, the system's internal rate of return will decrease by at least 1 per cent, which is unfavourable to the investments in the industry.

Tax rates are discussed in the market, but the range of the punitive tariff is yet to be determined. According to EnergyTrend, whether Chinese panel products should be included is debated by European PV manufacturers and the downstream companies. In the European solar industry, though PV manufacturers have continued to face deficit and the fear of bankruptcy, EPC companies and Project Developers (PD) still gained profit due to the low cost Chinese modules. Once module price increases, EPC companies may face significant profit loss if investors wish to maintain their overall revenue and investment projects may also be postponed.

In order to maintain their own interests, European EPC and PD manufacturers have opposed to such investigations. If the anti-dumping and countervailing investigation is put into practice, considering the production cost and recovery time, we believe that Chinese manufacturers will accelerate their module production transfer. They may sign OEM contracts with local manufacturers and considering the market potential and well as transportation and production cost, Southeast Asia may benefit the most and become China's largest overseas production base. In addition, Europe's ruling may also bring business opportunities to Taiwan. With the transferred orders, Taiwanese manufacturers may then be able to maintain considerable capacity and product price.

As for the spot market, due to the negative rumours in the market and the low contract and spot price, manufacturers are reluctant to invest in the Chinese market. As a result, polysilicon, Mono c-Si wafer, and Multi c-Si wafer price all stayed flat. As for USD quotes, affected by decreasing demands, polysilicon spot price has continued to fall. Rumours in the market has also shaken wafer manufacturers, thus this week's Mono c-Si wafer and Multi c-Si wafer price both showed a slight decrease. On the other hand, Taiwanese cell manufacturers have maintained a stable price increase, and cell/module demands are expected to increase in Q2.

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