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| Trade Fight Over Solar Benefits a Bystander | Trade Fight Over Solar Benefits a Bystander |
| (35 minutes later) | |
| The long-running trade conflicts over solar panels between China and the United States and Europe have sown dissatisfaction all around, leaving many manufacturers of solar materials complaining that the market is still unfair. | The long-running trade conflicts over solar panels between China and the United States and Europe have sown dissatisfaction all around, leaving many manufacturers of solar materials complaining that the market is still unfair. |
| But one country not involved in the disputes has already benefited from them and, with Saturday’s agreement between China and the European Union, stands to benefit again: Taiwan. | But one country not involved in the disputes has already benefited from them and, with Saturday’s agreement between China and the European Union, stands to benefit again: Taiwan. |
| Last October, after finding that Chinese companies were receiving unfair government subsidies and selling their merchandise below the cost of production, the United States imposed tariffs of roughly 24 to 36 percent on imported Chinese panels. But the ruling included a major loophole; it applied only to panels made from Chinese solar cells, the final major components that are assembled into finished modules. | |
| Many manufacturers were able to skirt the taxes by buying their cells elsewhere, mainly from Taiwan. | Many manufacturers were able to skirt the taxes by buying their cells elsewhere, mainly from Taiwan. |
| This month, for instance, the Neo Solar Power Corporation, a leading cell manufacturer based in Taiwan, announced its sixth consecutive month of growth, with a 74 percent increase in revenue in June over the month before, in part because of increased production capacity since its merger with another manufacturer, DelSolar. | This month, for instance, the Neo Solar Power Corporation, a leading cell manufacturer based in Taiwan, announced its sixth consecutive month of growth, with a 74 percent increase in revenue in June over the month before, in part because of increased production capacity since its merger with another manufacturer, DelSolar. |
| Taiwanese producers, which have been able to command a 4- to 5-cent per watt premium over Chinese-made cells, have been operating at fuller capacity and have sold out inventory faster than the Chinese, said Shayle Kann, vice president of research at GTM Research, which tracks clean-tech industries. And Hareon, a solar cell and module manufacturer in China, recently announced plans to build a large cell production plant in Taiwan with Mascotte Holdings, which makes solar-grade silicon in Taiwan. | Taiwanese producers, which have been able to command a 4- to 5-cent per watt premium over Chinese-made cells, have been operating at fuller capacity and have sold out inventory faster than the Chinese, said Shayle Kann, vice president of research at GTM Research, which tracks clean-tech industries. And Hareon, a solar cell and module manufacturer in China, recently announced plans to build a large cell production plant in Taiwan with Mascotte Holdings, which makes solar-grade silicon in Taiwan. |
| “Taiwan has benefited from the fact that the U.S. has left the Taiwanese loophole available for Chinese companies to essentially sneak into the U.S. market without paying the tariff,” said Pavel Molchanov, an analyst at Raymond James. | “Taiwan has benefited from the fact that the U.S. has left the Taiwanese loophole available for Chinese companies to essentially sneak into the U.S. market without paying the tariff,” said Pavel Molchanov, an analyst at Raymond James. |
| “Those extra few pennies that it costs the Chinese module companies, that’s cheaper than paying the tariff,” which would roughly cost an extra 20 cents per watt, he added. | “Those extra few pennies that it costs the Chinese module companies, that’s cheaper than paying the tariff,” which would roughly cost an extra 20 cents per watt, he added. |
| It is not just the trade loophole that has helped Taiwanese businesses, analysts said, but also strong demand for solar over all from China, the United States and Japan, despite the dire predictions that the trade conflict would lead to a rise in prices and stymie growth. “We’re not seeing a lot of evidence of the market slowing down,” said Adam Krop, vice president of equity research at Ardour Capital, an investment bank focused on energy technologies. | It is not just the trade loophole that has helped Taiwanese businesses, analysts said, but also strong demand for solar over all from China, the United States and Japan, despite the dire predictions that the trade conflict would lead to a rise in prices and stymie growth. “We’re not seeing a lot of evidence of the market slowing down,” said Adam Krop, vice president of equity research at Ardour Capital, an investment bank focused on energy technologies. |
| The European trade settlement could help increase production as well. | The European trade settlement could help increase production as well. |
| In that case, under the threat of 47.6 percent tariffs, China agreed that manufacturers would not sell panels below 56 euro cents per watt. But that price is even lower than panels were selling for when European manufacturers complained of dumping to the European Commission, and a group of them said over the weekend that they were preparing to file a lawsuit to overturn it. In China, 50 of 140 manufacturers rejected the settlement, which means that their merchandise will face the 47.6 percent tariff. | In that case, under the threat of 47.6 percent tariffs, China agreed that manufacturers would not sell panels below 56 euro cents per watt. But that price is even lower than panels were selling for when European manufacturers complained of dumping to the European Commission, and a group of them said over the weekend that they were preparing to file a lawsuit to overturn it. In China, 50 of 140 manufacturers rejected the settlement, which means that their merchandise will face the 47.6 percent tariff. |
| Among that group — smaller businesses that account for as little as 10 percent of Chinese exports to Europe, according to some estimates — it would be economical to try to sell to Europe only for bankrupt or nearly bankrupt companies that were trying to get rid of inventories without warranty for as little as 30 euro cents a watt. | Among that group — smaller businesses that account for as little as 10 percent of Chinese exports to Europe, according to some estimates — it would be economical to try to sell to Europe only for bankrupt or nearly bankrupt companies that were trying to get rid of inventories without warranty for as little as 30 euro cents a watt. |
| For them, it would still be cheaper to ship to the United States, with tariffs as high as about 36 percent. | For them, it would still be cheaper to ship to the United States, with tariffs as high as about 36 percent. |
| The settlement could help the Chinese government reach its goal of consolidating the industry, which relied on heavy government subsidies and loans from state-owned banks to rapidly scale up production. The resultant global glut of low-price panels drove many European and American companies out of business. | The settlement could help the Chinese government reach its goal of consolidating the industry, which relied on heavy government subsidies and loans from state-owned banks to rapidly scale up production. The resultant global glut of low-price panels drove many European and American companies out of business. |
| For Taiwan, the agreement opens the door for producers to make panels there and sell into the European market at an even lower price, analysts said. | For Taiwan, the agreement opens the door for producers to make panels there and sell into the European market at an even lower price, analysts said. |
| “You might still want to source outside China so that you can undercut the Chinese manufacturers in the European market,” Mr. Kann said, adding that some Chinese manufacturers had been looking at establishing low-cost production in India and Eastern Europe in addition to Taiwan in anticipation of the European settlement. | “You might still want to source outside China so that you can undercut the Chinese manufacturers in the European market,” Mr. Kann said, adding that some Chinese manufacturers had been looking at establishing low-cost production in India and Eastern Europe in addition to Taiwan in anticipation of the European settlement. |
| That could happen, though not in the short term, said Arturo Herrero, chief marketing officer of JinkoSolar, a Chinese panel manufacturer that has been buying its cells there to make modules for the United States market since the tariffs went into effect. | That could happen, though not in the short term, said Arturo Herrero, chief marketing officer of JinkoSolar, a Chinese panel manufacturer that has been buying its cells there to make modules for the United States market since the tariffs went into effect. |
| Most of Taiwan’s production capacity is already taken up meeting demand from companies trying to avoid the United States tariffs, making it more expensive to produce there than in China. | Most of Taiwan’s production capacity is already taken up meeting demand from companies trying to avoid the United States tariffs, making it more expensive to produce there than in China. |
| The immediate chief beneficiaries would be the “top players in this industry coming from China,” he said. | The immediate chief beneficiaries would be the “top players in this industry coming from China,” he said. |
| “Price will not be a differentiation — customers will choose at this minimum price the best brands in the industry.” | “Price will not be a differentiation — customers will choose at this minimum price the best brands in the industry.” |
| But it leaves the United States, which wanted European leaders to work with them on a multilateral agreement, on its own in an escalating conflict that has not helped the American industries as much as intended. | But it leaves the United States, which wanted European leaders to work with them on a multilateral agreement, on its own in an escalating conflict that has not helped the American industries as much as intended. |
| “It’s hard to see how this decision helps anyone except companies in China and Taiwan,” said Senator Ron Wyden, Democrat of Oregon and chairman of the Committee on Energy and Natural Resources. “In the end, the E.U. will not have just sold out its workers and companies that produce solar panels, but U.S. workers and employers as well.” | “It’s hard to see how this decision helps anyone except companies in China and Taiwan,” said Senator Ron Wyden, Democrat of Oregon and chairman of the Committee on Energy and Natural Resources. “In the end, the E.U. will not have just sold out its workers and companies that produce solar panels, but U.S. workers and employers as well.” |
| Beijing recently announced tariffs of up to 57 percent on American-made polysilicon, the main material in solar panels, a big blow to the industry. | Beijing recently announced tariffs of up to 57 percent on American-made polysilicon, the main material in solar panels, a big blow to the industry. |
| Now, the United States Commerce Department is taking a closer look at whether Chinese manufacturers are truthfully reporting the sources of cells they say are from outside of China. | Now, the United States Commerce Department is taking a closer look at whether Chinese manufacturers are truthfully reporting the sources of cells they say are from outside of China. |
| Trade officials have written letters to some of the largest manufacturers, including Trina, Suntech, LDK and Yingli Green Energy, asking for invoices and tracking records that show that the cells in their panels came from outside China. | Trade officials have written letters to some of the largest manufacturers, including Trina, Suntech, LDK and Yingli Green Energy, asking for invoices and tracking records that show that the cells in their panels came from outside China. |
| “We think the more they look, the more they will find large-scale evasion and circumvention by Chinese solar producers,” said Timothy C. Brightbill, a partner at the law firm Wiley Rein, who is representing the solar panel manufacturers that filed the trade case. | “We think the more they look, the more they will find large-scale evasion and circumvention by Chinese solar producers,” said Timothy C. Brightbill, a partner at the law firm Wiley Rein, who is representing the solar panel manufacturers that filed the trade case. |
| “We’re asking for the strongest enforcement efforts possible so that U.S. companies and workers can see real benefit from these trade cases.” | “We’re asking for the strongest enforcement efforts possible so that U.S. companies and workers can see real benefit from these trade cases.” |
| He added, “There’s been some benefit, but they’re still being harmed by pricing that is not sustainable.” | He added, “There’s been some benefit, but they’re still being harmed by pricing that is not sustainable.” |