China, the biggest producer of solar products, probably won’t impose tariffs on imported polysilicon, the main raw ingredient in panels that turn sunlight into electricity, according Aaron Chew, an analyst with Maxim Group LLC.
China is expected to rule Feb. 20 on complaints from domestic polysilicon producers that imports from Europe, South Korea and the U.S. are being sold in the country below cost, Chew said in a research note today.
The complaint is part of an escalating solar trade fight pitting China against the U.S. and Europe. Chew said a polysilicon tariff would be a retaliation for duties the U.S. imposed on Chinese solar products in October and Europe is considering. It may hurt Chinese Companies that make polysilicon-based cells and panels more than it would benefit the polysilicon suppliers.
Imposing a tariff on imported polysilicon “would raise production costs and further squeeze the economics of module manufacturing, already under pressure from severe price declines,” Chew said in the report.
China began investigating in November whether foreign polysilicon manufacturers, which supply 75 percent of the material worldwide, were dumping their product in China.
The world’s biggest polysilicon producer is China-based GCL-Poly Energy Holdings Ltd. (3800) The next four are South Korea’s OCI Co. (010060), Hemlock Semiconductor Corp. from the U.S., Germany’s Wacker Chemie AG (WCH) and Norway’s Renewable Energy Corp. (REC), according to Bloomberg New Energy Finance.
Polysilicon Rally
GCL-Poly shares have gained 36 percent this year, and Daqo New Energy Corp., another Chinese producer, is up 61 percent. Chew said the rally is based in part on speculation that a tariff will boost sales and has probably “gotten ahead of itself.”
Prices for solar panels dropped 22 percent in the past year as demand slowed. That will make it hard for Chinese manufacturers to absorb higher prices for polysilicon, said Jeffrey Osborne, an analyst at Stifel Nicolaus & Co. in New York.
“Given the inventory of finished solar modules around the globe and manufacturing oversupply,” polysilicon duties would “definitely crimp” any potential margin expansion of solar wafer, cell and module producers near term, Osborne said today in an e-mail.
“They are unlikely to be able to raise their prices to offset the higher silicon prices,” he said.
Chinese polysilicon companies don’t produce enough to supply the entire country, especially if the government follows through on efforts to boost solar installations to 10 gigawatts this year, Osborne said.