The Commerce Dept. confirmed steep import duties yesterday on solar products from China and Taiwan earlier on Wednesday in a decision that may inflame trade tensions between the two countries.
The first domino to fall from the tariffs came in a statement from Norway’s REC Silicon, saying earnings will be impacted by the duties, some as high as 126%.
“Changes in the availability of the Process in Trade for US solar grade polysilicon exports to China will have a negative effect on REC Silicon’s earnings and cash flows in the short term,” the Oslo-listed firm said in a statement.
REC manufactures silicon materials for the solar and electronics industries, expects fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) between $35 million and $40 million, down from $44.9 million in the third quarter.
REC’s polysilicon exports to China have been subject to a final AD tariff of 57% since January 2014 but it has been able to skirt the import tax by way of the Process in Trade clause. Process in Trade rules previously dictated that any material used in domestic manufacturing would be exempt from import duties provided the finished product is then exported. The final determination closes closes that window for REC and other polysilicon manufacturers.
Solar grade polysilicon sales in China make up 45% of the company’s total revenue. Another loophole was closed for silicon from Taiwan with this ruling. n In the Taiwan investigation, Commerce issued Gintech Energy Corporation and Motech Industries Inc. final dumping margins of 27.55% and 11.45% respectively. All other companies in Taiwan received a final dumping margin of 19.50%.
The Oregon-based US subsidiary of Germany’s SolarWorld was the petitioner in this case and it gained a lot in the ruling. Solarworld and its allies in the Coalition for American Solar Manufacturing (CASM) released a triumphant statement after Commerce’s decision.
In October, SolarWorld announced it will add a new production line to its facility in Hillsboro, Ore. that will boost the factory’s panel-assembly capacity from 380 megawatts up to 530 megawatts. SolarWorld will also add 100 megawatts of advanced cell production capacity for a total of 435 megawatts. The expansion is expected to add 200 jobs.
“These remedies come just in time to enable the domestic industry to return to conditions of fair trade,” Mukesh Dulani, US president of SolarWorld, said in a statement. “The tariffs and scope set the stage for companies to create new jobs and build or expand factories on US soil.”
While that might be true for US manufacturing of panels, the Coalition for Affordable Solar Energy (CASE), an industry group representing mostly downstream US panel sellers and installers, released its own response, saying that the new anti-dumping duties will inhibit competition and increase solar panel prices, making it harder for solar technology to compete against fossil fuels.
“The US government is actually creating a module shortage that will make it hard for the U.S. solar industry to reach it’s 2015 and 2016 goals,” said Jigar Shah, cleantech entrepreneur and CASE president.
The fight has been going on between CASM and CASE for the last 2 years and, if anything, the sides grew further apart prior to Commerce’s ruling. The battle now moves on to the International Trade Commission. If the commissioners find that the US industry has been harmed by Chinese and Taiwanese imports, the tariffs will become permanent on February 1. If not, the tariffs will be thrown out. The ITC is expected to make its final decision by January 20.