US import duties on Chinese solar panels to have limited impact

26 March 2012 07:53  [Source: ICIS news]

SINGAPORE (ICIS)--The imposition of US duties on solar panel imports from China is unlikely to hamper Beijing's growing market share and the drop in solar panel prices, Fitch Ratings said on Monday.

The US Commerce Deparment on 20 March announced preliminary import duties of 2.9-4.73% on China-made solar panels, after it found that Chinese solar manufacturers had received unfair government subsidies.

A second preliminary decision is scheduled in May this year, according to Fitch Ratings in a statement.

“We believe the initial tariff duties…imposed by the Commerce Department are quite low and therefore represent more of a warning than a barrier that could significantly affect the Chinese companies' ability to compete in the US market,” the firm said.

The initial duties are unlikely to affect upstream polysilicon and wafer producers in China such as GCL-Poly Energy Holdings, as they normally sell their output to downstream manufacturers who export their solar panels, it said.

The cash flow generation of these downstream solar panel exporters in China may be negatively affected, depending on the size of dumping duties that could be imposed in May, the ratings firm said.

The Coalition for American Solar Manufacturing expects the results of a second investigation in May to result in more restrictive duties and penalties, as anti-dumping margins are typically higher than subsidy margins, according to Fitch Ratings.

“The US industry alleges that Chinese companies received a significant advantage from low government-set lending rates, but this may prove difficult to establish in the globally low-interest-rate environment,” it said.

Meanwhile, consolidation within the solar industry in North America is likely to continue this year after several solar manufacturing facilities in the region filed for bankruptcy on the back of oversupply and competition with Chinese manufacturers, Fitch Ratings said.

“The winners will be those who can lower costs the fastest, and clearly the Chinese companies are in an advantageous position,” it added.

The US imported $2.8bn (€2.1bn) worth of solar cells and panels from China in 2011, surging from around $1.2bn in 2010, according to Fitch Ratings, citing industry estimates.

Chinese solar panel makers depend on exports for more than 90% of their earnings and the US is their second-largest market, after Europe, the firm said.

China now accounts for about half of the world's solar panel and module production, it added.

($1 = €0.75)

By: Nurluqman Suratman

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