Wacker, OCI benefiting from China's polysilicon duties

The spoils of the ongoing trade war between China and the U.S. are being shared by Germany’s Wacker Chemie AG and South Korea’s OCI Company Ltd., according to findings from Bernreuter Research.

The analysts have revealed figures showing brisk business for both of the polysilicon manufacturers in the wake of China’s latest ruling regarding anti-dumping and anti-subsidy duties levied on polysilicon imports into the country.

With U.S. manufacturers subject to a 57% charge on imports into China for the next five years, EU-based manufacturers – currently exempt from any duty measures – have moved into the space, led by Germany’s Wacker. Meanwhile, South Korea’s OCI must pay a mere 2.4% tariff, helping the company increase its presence in the polysilicon market of its near neighbor.

The Chinese Ministry of Commerce (MOFCOM) decided to impose the stinging 57% anti-dumping tariff on U.S-made silicon last week in what was viewed as a pre-emptive tit-for-tat measure having caught wind of similar plans emanating Stateside. Korea escaped with a far lower tariff range, while the EU – despite persistent rumblings that similar injurious measures could be in the offing – escaped completely.

"Now it is unlikely that China will still impose final duties on polysilicon imports from the EU," said Johannes Bernreuter, head of Bernreuter Research. "The latest decision has obviously been influenced by the compromise that the EU and China reached last July in the trade dispute about imports of Chinese wafers, solar cells and modules into the EU."

Over the course of the dispute, which first began in July 2013, both Wacker and OCI have gained market share in China, report the analysts. China’s total imported polysilicon volume may have contracted slightly between 2012 and 2013 (falling from 82,755 metric tons to 80,653), but Wacker has increased its share of the market from 25% to almost 33% in the same period, while OCI’s share rose to 28%, from less than 24% in 2012. Polysilicon imports from the U.S. over that same period fell from 39% in 2012 to below 28% at the end of 2013.

American polysilicon manufacturers such as REC Silicon Inc. and Hemlock Semiconductor Corp. haven’t completely vacated the Chinese market, however. Some manufacturers have exploited a loophole in the ruling by using so-called processing trade to avoid high duties. This works by importing goods that are then processed into products for export from China. These products are exempt from any duties and, since the introduction of the preliminary anti-dumping measures last July, the share of processing trade in polysilicon imports from the U.S. has risen to values over 90%.

"Speculations that the Chinese government could change the rules for processing trade of polysilcon are playing into the hands of Wacker and OCI," says Bernreuter. "We expect that both companies will continue to raise their share in polysilicon imports into China."