US developers turn back on Chinese suppliers

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With a report issued by GTM Research predicting the price of Chinese solar modules in the U.S. is about to rise by an average 14%, one of the company’s senior analysts said the market has already started to reflect the fallout from the latest U.S.-China trade spat.

With the ink barely dry on the U.S. Department of Commerce’s preliminary decision to impose countervailing duties (CVD) on Chinese and Taiwanese modules and cells, two significant American developers have signed deals with non-Chinese manufacturers, according to GTM Research’s Shayle Kann.

Kann, senior VP of the market research company, said SolarCity has signed a 100 MW supply deal with Norwegian-U.S. manufacturer REC Group and RGS Energy has put pen to paper on an agreement with German manufacturer SolarWorld, whose U.S. subsidiary was so prominent in driving through the CVD investigation.

Although eager to stress the Commerce Department decision, on June 2, is only a preliminary one, GTM Research has calculated the range of options open to Far Eastern manufacturers hoping to keep American customers, will see the price of their modules rise by an average of 14% from next month onwards.

Price to rise from $0.76/W

GTM calculated the price of duty-free Chinese modules wriggling around 2012 U.S. tariffs by incorporating cells manufactured in neighbouring Taiwan, was $0.76/W. GTM’s The 2014 U.S. China Solar Trade Dispute: Status, Strategies and Market Impacts report, released yesterday, predicts the most cost efficient strategy to deal with the latest duty regime in the States is for manufacturers to use Chinese wafers in unbranded cells and modules assembled and sold through third-party nations, such as India, South Korea, Poland and Mexico – a strategy GTM estimates, would drive the delivery price of modules up to $0.76/W.

Selling all-Chinese modules incorporating the 2012 duties would mean a price of $0.82/W, and developing or utilizing offshore capacity would see products made by Chinese companies sold for $0.83/W, says GTM. The option of assembling modules in China from Taiwanese wafers and cells – presumably open to Taiwanese manufacturers – would come in at $0.85/W, says GTM, still well below the $0.94/W the company estimates the latest Commerce Department decision will see panels sold at in the U.S. if manufacturers simply stump up for the new CVD.

With an average price rise of 14% predicted, the Coalition for Affordable Solar Energy (CASE), anti duty lobby group has called upon U.S. president Barack Obama to step in and halt the imposition of duties by negotiating a price agreement, as the EU did with Chinese manufacturers last summer.

‘Obama must step in’

"This is surely not the result sought by an administration that has championed the growth of the American solar industry and recently re-installed solar panels on the White House," said CASE president Jigar Shah, in a press release yesterday. "The Obama administration has to take a more active role in settling this dispute."

The Department of Commerce opted to impose CVD of 35.21% on products made by Wuxi Suntech and five of its affiliates, of 18.56% on Trina Solar cells and modules and of 26.89% on all other Chinese and Taiwanese manufacturers, after finding they had benefited from illegal government subsidies.

The preliminary decision is expected to be confirmed on August 18 before review by the International Trade Commission (ITC) and a final decision on October 3.

The Commerce Department has yet to announce whether any further duties will be imposed on such products under the anti dumping (AD) strand of its investigation.

According to GTM’s figures, Chinese panels accounted for 31% of the U.S. market last year, and more than half of the nation’s booming distributed solar market.

The findings of the recent Indian anti dumping investigation into foreign – including U.S.-manufactured – modules and cells, revealed Chinese manufacturers attempted to negotiate an EU-style minimum price commitment once notified duties were imminent and the same gambit may be due in the coming weeks, with the EU settlement widely considered to have favored exporters over ailing domestic manufacturers.