Last night the US Department of Commerce announced anti-dumping tariffs of +31% against 59 Chinese solar manufacturers. Though this is a preliminary finding which is subject to change, it is much higher than expected and reflects the Department of Commerce’s view that these Chinese operators are dumping solar panels at less than fair value into the US market. Their proposal includes a 249.96% tariff on all other Chinese manufacturers and is retrospective for 90 days. The final ruling is due in November, but is unlikely to differ significantly from these proposals.
The question is what’s next? The US has now fired the first round in what looks like the start of a solar trade war. China has been considering bringing anti-dumping claims against US and Korean polysilicon manufacturers which now looks more than likely to happen. The chances of an all-out global solar trade war suddenly look very high. This is not what the industry needs just as there was a chance that lower pricing of solar panels could lead to a step up in demand. Higher prices in the US will slow the slide to unsubsidised demand in that country, though at only 6% of global demand it is likely to have limited impact globally. More worrying though is the likely Chinese response, and potentially an attempt by SolarWorld to get the European Union to impose their own antidumping tariffs – something that SolarWorld’s Chairman has already indicated he plans to do. At 70% of global demand, action by Europe really would matter.
Overall we see this as a further vindication of our cautious stance on solar stocks and encourages us to continue to watch from the sidelines to see how things develop.
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