Trade case: Higher CVD rates applied to Chinese PV manufacturers

According to Jefferies, the DOC found that the Chinese manufacturers in question had been privy to both discounted electricity and "illegal" grant programs. As a result, Suntech will see its CVD rates increase from 2.9 to 3.44 percent, and Trina’s from 4.73 to 5.81 percent.

Regarding the remaining Chinese photovoltaic cell manufacturers, a tariff of 3.6 percent was originally applied back in March. They will, however, also see the rates raised, as a weighted average of Suntech’s and Trina’s.

This week, the DOC has begun its formal audits at the two manufacturing giants’ factories. If it makes an affirmative determination, and the U.S. International Trade Commission (ITC) concurs that imports of cells from China materially injure, or threaten material injury to, the U.S. industry, it will issue a CVD order. The ITC is scheduled to make its final injury determination on July 19.

Jefferies commented that while the news is not positive, it is also not unexpected and will have a "minimal" impact. "We estimate that the total CVD duty liability of all Chinese suppliers for 1Q12 will increase to $28.7M from $25.2M," wrote the analysts in an industry note.

They added that the dumping duty determination is more important. While a preliminary decision was announced on May 17, a final determination will not be made by DOC until early October, and the ITC until November 19.

Commenting, the analysts added, "We estimate, if the Dumping Duty plus CVD cost are more than 15% the results would be similar: buy cells from Taiwan, which we estimate costs an incremental ~$0.06-0.09/watt. However, this increase may finally prove to Chinese producers these duties are unlikely to be reversed."

As has been widely reported, Taiwan is expected to be the main beneficiary from the U.S.-Sino trade case, as Chinese manufacturers, somewhat ironically, look to other Asian nations to produce their cells.

As pv magazine wrote on May 23, while Taiwan is expected to pick up much of the slack, skeptics have questioned the longevity. "They also note that ultimately, the ruling does little to address the core issue facing the industry: overcapacity in the market. In fact, some analysts feel it might even make the situation worse," wrote author Tim Ferry.

At this year’s Intersolar Europe, held in Munich from June 13 to 15, Taiwanese cell manufacturer, TSEC (Taiwan Solar Energy Company) told pv magazine that since the preliminary dumping determination, it has seen a 20 to 30 percent increase in orders from Chinese companies. This, said Robin Chien, has been seen by most of the Taiwan-based manufacturers.

However, he doesn’t expect the boost to last for long – just three to six months. Going forward, he said, Chinese manufacturers will look for other solutions, including opening up other manufacturing locations or partnering with other firms outside of China.

European trade case

Despite speculation, a European trade case was not filed during the Intersolar tradeshow. However, Jefferies remains confident that it will be filed soon. A European trade case is expected to have a "larger" impact on producers, said the analysts, since Europe accounts for around 70 percent of global photovoltaic demand, compared to the U.S.’ around 10 percent share.