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Europe's Anti-Dumping Tariff About To Finalize, Chinese PV Manufacturers' Three Contingency Plans

Apart from the rumor which says that China's going to impose anti-dumping tariffs on the imported polysilicon, the Chinese government continues to communicate with Europe's major member countries through diplomatic ways, hoping the member countries can encourage Europe to adopt a more moderate standpoint. The German government officials have spoken in succession lately indicating their disagreement with any regulations that may raise the possibility of a trade war. This made the market believe there might be a change to the double reverse policy (anti-dumping and countervailing). With the situation constantly changing, the double reverse policy is likely to lead to three possible scenarios, according to EnergyTrend, a green energy research division of TrendForce: 1) As originally intended, Chinese manufactures still have to pay high punitive tariffs. 2) The case is overturned. The punishment towards Chinese manufacturers will be toned down or cancelled. 3) A compromise is reached. The alternative solutions so far include the possible control on total capacity and the limitation on the lowest sales price.

According to EnergyTrend, the initial conclusion of the case will not have to be agreed on by the member countries. The final ruling, however, will have to be approved by them. The critical focus for now is whether the final result in December will be in China's favor or not. And which one of the three scenarios above will be adopted? The result will depend on the negotiations among the European Investigation Council, the European member countries, and China. We believe that the possibility for cancelling the punishment won't be high in the initial stage in June. Based on this, EnergyTrend believes there won't be major problems with the purchase orders for Q2/Q3. The market will be ready to enter into the off-peak season in Q4, which is also when the final announcement is set to take place. The status and effects of the double reverse case can be further observed through Europe's solar energy exhibition in October. This will allow us to better evaluate the impact on next year's purchase orders.

On the other side, the range of products affected by Europe's anti-dumping tariff includes not only the modules but also the Chinese PV cells that are exported to Europe. Assuming the anti-dumping tariff is put into practice (as scenario 1 suggests), we believe Chinese PV manufactures may come up with the following three strategies:

Strategy 1 : Direct export of China's module production to Europe

Strategy 2: China's PV cells will be exported to Europe or other regions to be assembled into modules

Strategy 3: Have a third party country produce PV cells in Europe or export PV modules to that region

Full Article: http://pv.energytrend.com/price/20130527-5262.html

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.