China Solars Brace for Icy 2012 With US Trade Complaint 中国太阳能产业需直面美欧关税壁垒

By newsdoug on October 20, 2011

China solar firms brace for frost 2012 after US complaint After a month of tough-talk on Capitol Hill blasting China’s generous subsidies for its solar sector, the inevitable has happened and a group of leading US solar panel makers has filed to have punitive tariffs leveled against their Chinese rivals. The group, led by the US arm of Germany’s SolarWorld (Frankfurt: SWV) has officially petitioned the US International Trade Commission (ITC) to level the punitive tariffs after Chinese solar makers have prospered under years of support from Beijing, which has provided a wide range of incentives like cheap costs for land and low interest loans, to create an industry that now controls more than half the global market. (complaint announcement) Chinese solar firms, already suffering in the global sector’s worst-ever downturn due to overcapacity and weak demand, saw their shares plunge to near new all-time lows on the news, with Suntech (NYSE: STP), Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) all down 6-9 percent in New York trading on Wednesday. I have to admit that the rapid speed of this latest development has surprised even me. It was only a month ago that the US House of Representatives launched hearings into this matter (previous post), after a major firm, Solyndra, became the latest US victim to declare bankruptcy, in part due to stiff competition from China. Since then, governments in both the US and Western Europe, the world’s two largest markets for solar panels, have shown strong support for punitive tariffs, which, in the case of the US, is motivated partly by politicians’ desire to look tough on China in the year before presidential elections in 2012. With such strong Congressional backing, the filing of a complaint by US solar firms to the ITC is likely to get a quick hearing and could result in punitive tariffs being levied as soon as the end of the year, in my view. Punitive tariffs in Western Europe could follow a short time later, casting a huge chill over the Chinese sector until Beijing makes some very open moves to show it is cutting back on its generous subsidies. Either way, Chinese solar firms and their stocks are looking at a chilly climate in 2012, with no relief in sight until the second half of the year at earliest depending on how Beijing reacts.

Bottom line: China’s solar panel makers will face a chilly 2012 following the filing of an unfair trade complaint against them in the US and the likelihood of similar action in Europe.

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