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EU Solar Duty May Spur Short-Term Imports as Deal Sought

June 05, 2013

EU Solar Duties May Boost Short-Term Imports as Deal Sought

Engineers work in a solar panel facility in China. Photographer: Philippe Lopez/AFP via Getty Images

Tariffs imposed by the European Union on Chinese solar panels are lower than expected and may drive up imports for the next two months while officials pursue a trade agreement, renewable-energy developers said.

The European Commission yesterday announced provisional anti-dumping duties of 11.8 percent on photovoltaic products from more than 100 Chinese manufacturers, an initial rate that may increase more than fivefold in August.

The rate comes as a relief to Chinese producers that were anticipating steeper penalties, said Angelo Zino, an analyst at Standard & Poor’s Financial Services LLC in New York. European customers may stockpile panels before the duties increase, and some companies expect Beijing and the EU to negotiate a deal that avoids the higher tariffs.

“We were looking at north of 35 percent,” Zino said in an interview yesterday. “If you’re a Chinese solar maker, it’s pretty good news. At the same time, it leaves open the door for them to potentially negotiate a deal in the coming months.”

The preliminary rate will take effect tomorrow. Levies jump Aug. 6 to a range of 37.2 percent to 67.9 percent unless an accord is reached. EU governments have until Dec. 6 to decide whether to turn the provisional duties into “definitive” five-year measures.

The initial rate “is a clear defeat for the protectionist and anti-solar lobbies,” Thierry Lepercq, chief executive officer of Solairedirect SA, France’s second-largest solar developer, said in an e-mail. The duties were opposed by most EU nations and the two-stage schedule is “an attempt at face-saving,” he said. “The two-month window could generate some one-time inflows of imports” before the rates go up.

China Reaction

China “firmly” opposes the duties, Shen Danyang, a Commerce Ministry spokesman, said in a statement posted on the ministry’s website today.

China hopes the EU shows flexibility and that a solution acceptable to both parties through negotiation can be reached, Shen said, adding that the nation hopes both parties can start negotiations as soon as possible. Two of the country’s three largest solar manufacturers said they agree.

“Punitive tariffs -- no matter at what level -- will inevitably lead to higher prices for solar products, causing at least the stagnation of the solar industry in Europe,” Miao Liansheng, chief executive officer of Yingli Green Energy Holding Co. (YGE), China’s largest panel maker by shipments, said in a statement today. The company seeks “the prompt resumption of talks between China and the European Commission.”

‘Unwarranted’ Duties

Yingli’s American depositary receipts, each worth one ordinary share, fell 5.4 percent to $2.79 at the close in New York. ADRs of Trina Solar Ltd. (TSL), China’s third-largest panel maker, declined 8.7 percent to $5.60. Each is worth 50 shares.

“We urge all parties involved to seek a mutually beneficial solution,” Trina CEO Gao Jifan said in a statement today. “These duties are unwarranted.”

Solar manufacturers in Europe have said Chinese rivals sold panels in the 27-nation bloc below cost, a practice known as dumping. Europe accounted for about 55 percent of the global demand for photovoltaic panels last year, according to data compiled by Bloomberg.

“We are relieved that the European Commission finally introduced concrete measures,” EU ProSun, a group that represents European producers including Germany’s biggest panel-maker Solarworld AG (SWV), said in a statement yesterday. “Dumping is fraud and harms the future of solar energy.”

The two biggest U.S. solar manufacturers, First Solar Inc. (FSLR) and SunPower Corp., declined to comment.

Bargaining Incentive

The duties are “an emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly from this dumping,” European Trade Commissioner Karel De Gucht said yesterday. He said the lower rate is an incentive to bring the Chinese solar industry to the bargaining table.

That may be exactly what happens, Robert Schramm-Fuchs, solar analyst at Macquarie Group Ltd. in London, said in a research note. The EU and China aren’t interested in a trade war and are seeking a settlement.

“A negotiated amicable solution is likely because the negative impacts of import duties on the European Union would outweigh any benefits,” he said. Possible results may include setting minimum prices for Chinese solar panels or import quotas.

The EU may be reluctant to get involved in a trade war with China over concerns that the Asian nation may impose its own import barriers, said Gordon Johnson, an analyst with Axiom Capital Management Inc. in New York. China’s Ministry of Commerce has probed imports from the EU and U.S. of polysilicon, the main raw material in solar cells.

“If the EU would implement significant restrictions on China’s solar industry, there definitely would be retaliations from China,” Johnson said by phone. “China has the upper hand in the discussion.”

To contact the reporters on this story: Marc Roca in London at mroca6@bloomberg.net; Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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