The effect of the US anti-dumping and anti-subsidy investigation against China-made solar cells has been questioned especially when China-based solar firms are now able to buy solar cells from non-China regions and continue to assemble the products into modules to ship to the US market. Solar cell makers have noted that if the US levies tariffs on China-made solar modules, the action will affect the supply and prices of solar modules in the US market. This means end market installations in the US will also be affected. Hence the possibility for the US government to levy punitive tariffs on China-made solar modules is low, solar firms believe.
However, Europe's anti-dumping and anti-subsidy investigation against China-based solar firms targets solar wafers, cells and modules. All three types of products may be subjects to punitive tariffs.
But solar makers believe it is likely for Europe to adopt the same strategy as the US's to levy tariffs on solar cells alone because China-made solar wafers account for 90% of the global market and if wafers are subject to the high tariffs, Europe may face severe solar wafer shortage.
Since 2011, the global solar industry has been suffering due to oversupply and most Europe-based solar firms that have filed for bankruptcy due to the relatively high production costs were cell makers. Therefore, the Europe market will be hit least if only solar cells get taxed. Europe-based solar modules can shift solar cell orders to other regions and so can China-based solar module firms to avoid the tax.
If solar modules get taxed in Europe, whether alone or with solar cells, there will be supply shortages and rising end market prices of solar modules in Europe. This is because China is the biggest producer of modules with the lowest production costs.
The Taiwan-based solar supply chain, which mainly produces cells, has been negatively affected by Europe's solar probe against China-based firms. Due to expectations of the preliminary result of the investigation, China-based solar firms have been dumping products into Europe, which has caused prices to drop significantly, affecting Taiwan-based peers. Solar product prices dropped rapidly in the third quarter of 2012 and caused many Taiwan-based firms to reduce capacity utilization rates.
However, if Europe decides to levy high tariffs on China-made solar cells, Taiwan-based firms are predicted to benefit by cooperating with Europe- and China-based downstream solar firms in the long run.
Europe's anti-dumping and anti-subsidy investigation against China-based solar firms will not only benefit Taiwan, it will also benefit South Korea-based solar firms that have been eager to enter the market.
