Tuesday, May 21, 2013

Who is benefiting from anti-dumping in Europe ?

We look at the European Union tariffs now imposed on imported Chinese panels and how some PV makers are reporting an upswing in sales as a direct result of the protectionist measures.

The European Union (EU) is officially imposing tariffs on imported Chinese solar panels in an effort to protect its own module makers. European Commission (EC) Trade Head Karel De Gucht is recommending that the EC impose anti-dumping (AD) charges similar to those imposed last year by the United States, according to Reuters.
But what did the EU actually uncover in its investigation? A Bloomberg report summarised it nicely: “The investigation covered EU imports of crystalline silicon photovoltaic (PV) panels, cells, and wafers valued at $27.6bn in 2011, which amounted to more than half the global PV market. The Chinese companies owned almost no global PV market share in 2004, but controlled 80 percent of the global market by 2011.”
The tariffs that will now be imposed will average 47.6 per cent for the more than 100 Chinese manufacturers found by the EC to have been involved in the dumping, but will vary by the extent of the manufacturer’s dumping and the extent of their cooperation with the EC’s investigation, news reports by the Wall Street Journal (WSJ) wrote. 
Those that will feel the most pain, include Suntech Power Holdings its subsidiaries (tariffs of 48.6%); LDK Solar (55.9%); Trina Solar (51.5%) and JinkoSolar (58.7%). Those companies that decided against cooperating with the EC investigation will be fined heavily at 67.9%, according to WSJ. 

Chinese tariffs already paying off in EU

But in the run up to this EU decision to impose tariffs, how were European companies reacting and was there anything to gain in all of this other than greater peace of mind going forward that they will have a fairer share of the market?
At least one company has no complaints about European Community (EC) moves to slap taxes on cheap imported Chinese PV panels. 
Innotech Solar, a Scandinavian-German supplier of “environmentally friendly modules with optimised solar cells”, claims business is picking up nicely thanks to EU ruminations over tariffs for imports from China. 
Officials declared in March that the EC would start registering Chinese wafer, cell and module imports, and decided this month to impose tariffs. 
But Innotech asserts the uncertainty surrounding the outcome has already been enough to lift its sales.
“The company is benefiting from the increased demand for European solar modules from distributors who want to avoid paying backdated anti-dumping duties for purchasing modules made in China,” said Innotech in a press statement. 
It claims to have picked up new contracts with six distributors in recent months and is increasing production, with a medium-term aim of achieving a total capacity of 170MW.

Changing strategy

In press material, Dr Thomas Hillig, vice president of module sales and marketing, explains: “Many distributors are currently changing their strategy.
“As potential anti-dumping duties are making it unclear who will provide the cheapest solar modules in the future, distributors are including more and more products with unique selling points in their product portfolios to allow them to compete on factors other than price alone.”
Hillig adds that in 2012 distributors always focused directly on the price. Now Innotech is selling modules based on factors such as a low carbon footprint, high yields in warm ambient temperatures and suitability for east-west-oriented roofs.
Innotech makes modules using a thermal imaging process that it says restores the performance of low-efficiency solar cells to their full capacity. 
The company optimises solar cells from different manufacturers in the German city of Halle an der Saale and manufactures its modules in Glava, Sweden. Apart from its ethylene vinyl acetate film, which comes from Japan, Innotech only uses components from European manufacturers.
Scott Burger, a solar analyst at GTM Research solar, agrees the EC anti-dumping announcement has rattled distributors, but hints that this may not be the main reason why some manufacturers are enjoying increased sales. 

Market uncertainty

“I would say there are a few things at play here,” says Burger. “Firstly, the market was very shaken up and nervous following the March announcement. This has caused some uncertainty in the market despite the lack of precedent for the EC imposing retroactive duties.” 
However, he adds: “I think the market has settled since the initial announcement. Prices have stabilised and didn't rise significantly in the first quarter. This suggests that even if EU manufacturers are increasing production, they are likely doing so at painful prices. 
Burger says GTM has not heard many reports of significantly increased utilisation from EU manufacturers and “our channel checks assume that tariffs will be minimal and that the cases will likely be solved diplomatically. 
According to Burger, even with the EC anti-dumping and countervailing tariffs being imposed in the 20% to 30% range on cells and modules, there are options for Chinese manufacturers to continue to supply the market.
So what is going on at Innotech, then? While anti-dumping fears may certainly be at play, distributors could have other motives for signing up with the module maker. One of them is apparent in further comments from Hillig. 

Economic stability

“The cost benefits brought about by our special production process means that, unlike many other manufacturers, we have a positive cash flow,” he says. “This economic stability was a further crucial factor which resulted in our new distributors deciding to work with us.”
Ultimately, then, it seems that while European anti-dumping moves may be having some beneficial effects for some module makers, it is too early to claim a benefit for the EC solar sector as a whole.
Instead, there is evidence that some vendors, such as Innotech, are managing to find niches of opportunity in what has hitherto been a pretty bleak market for some time. Over at Kyocera, for example, the east is not synonymous with threat, but with opportunity. 
“Kyocera has a production facility in the Czech Republic, which was built to satisfy the demand in Europe,” says Daniela Faust, manager of corporate communications. 
“But since the demand has dropped in Europe because of cutbacks in feed-in tariffs, in particular in Germany and in other countries as well, the factory in the Czech Republic is fully booked for the production of modules in Japan.”
Hence it is market dynamics rather than government intervention that is driving production at Kyocera. The chances are this will remain the case for other manufacturers, too. 

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