The US International Trade Commission(ITC)announced the result of the anti-dumping and anti-subsidy investigation against China-based solar firms on November 7,2012.China-made solar cells will be subject to 14.78-15.97%anti-subsidy tariffs and 18.32-249.96%anti-dumping tariffs.The tarrifs will be in place for five years.The result of this is likely to curb China-made solar cells from entering the US market,said Ellick Liao,chairman of solar firm Taiwan Solar Energy(TSEC).
China-based solar firms are more concerned with the antitust investigation being conducted by the EU.If the EU investigation also results in punitive tariffs against China-based solar firms,then about 70%of solar product imports from China will be blocked,said Liao.If the EU levies a tariff rate higher than 20%,added Liao,China-based solar firms will have to rely heavily on Taiwan-based solar cell makers to avoid the tariffs,said Liao.
In the beginning of 2012,China exported around 10GW of products to Europe and 2GW to the US.If the trade war begins,such demand will have to be met by outsourcing production to firms outside of China,Liao stated.In addition,clients from other areas who have relied on China suppliers may also have to look for other alternatives,said Liao.This means,Taiwan may have an opportunity to receive 12GW of orders.As Taiwan's current supply chain can only fulfill 8GW of demand,the trade war will cause undersupply,added Liao.
The antitrust investigation in the EU will affect China greatly because more than 70%of China's solar exports rely on the Europe market.Despite the fact that the EU investigation currently includes solar wafers,cells and modules,it is unlikely for the EU to put punitive tariffs on solar wafers,said Liao,but cells and modules are likely to be the target.
If the accumulated tariffs on cells and modules exceed 20%,cost concenrs may send China-based firms looking for assistance from firms from other regions.Taiwan-based makers who are cost competitive will become one of the best choices,Liao pointed out.Hence,Liao believes the crucial factor that will affect Taiwan's supply chain is whether the tariffs will exceed 20%.Liao added that the 20%tariff will narrow the cost gap between China-and EU-,US-based firms,and competition will heat up.
Global solar installations have been increasing and in 2012,the US market is likely to reach 2.5GW,said Liao.China-based solar firms account for about 1GW in the US market in 2012,while the rest is shared by US-based makers such as SunPower and First Solar,Japan's Sharp and Kyocera,and Germany-based Solarworld.The US market is likely to be around 3.5GW in 2013,and due to the possible transfer of orders,Taiwan is likely to obtain orders around 2GW from China and other regions,stated Liao.
Furthermore,Liao pointed out,in 2012 China has exported around 10GW of cell and module to Europe,and with 20%or above tariffs,it would be cost effective for China-based solar firms to procure cells from Taiwan-based makers.Liao believes this means Taiwan will see 10GW of transferred orders.
If the EU begins to levy punitive tariffs against China-based firms,Liao believes that China-based firms will not solely depend on domestic demand.Liao noted that China's domestic demand has just begun to grow and is not enough to help all China solar firms.Hence,China-based firms are likely to strengthen distribution channels in other emerging markets to reduce the impact caused by the barriers in the EU and US markets,Liao added.
China-based solar firms may want to move manufacturing facilities outside of China to avoid the tariffs.Nevertheless,only tier-one solar firms in China are likely to move plants to other regions,said Liao.Furthermore,Liao believes that tier-one solar firms will need only one year to get their overseas plants running smoothly,which means Taiwan-based solar firms should capture this short period of time to strengthen its global position.
One factor that might change the game,said Liao,is the expansion of South Korea-based solar firms and one example is the recent acquisition of Germany-based Q-Cells by South Korea-based Hanwha.If South Korea-based solar firms expand,Taiwan's global market share will decrease.
Shortly after the US made its antitrust decisions in May,China makers were willing to accept solar cells with average efficiency above 16.4%,according to Liao.But in July,China-based solar firms realized that the impact from the US investigation was not as serious as previosuly thought,and that Taiwan had abundant capacity,they started requesting higher solar cell efficiency at 16.6-16.8%.Some have even requested solar cell makers with less orders to provide solar cells above 17%of conversion efficiency,said Liao.
Nevertheless,according to Liao,China makers are worried that the ITC decision will lead the EU to follow suit,and they have been more flexible on solar cell conversion efficiency with Taiwan-based suppliers.
