US Solar Industry Pessimistic On China Tariffs

aol-energyEditor’s Note: EarthTechling is proud to repost this article courtesy of AOL Energy. Author credit goes to Jon Hurdle.

If US solar manufacturers were looking to recently upheld trade tariffs to provide relief from the onslaught of low-priced Chinese panels that has decimated the US industry, they may be disappointed, industry participants said.

Duties of 24 to 36 percent on most solar panels imported from China, as confirmed by the US International Trade Commission in early November, are not expected to drive up prices or make US manufacturers more competitive because of a loophole in the regulation that allows low-cost Chinese producers to avoid the tariffs if they make the solar assemblies outside China.

The effort to protect the US market won’t overcome the world oversupply that has caused pain for domestic manufacturers but boosted US installers who are benefiting from strong orders for low-priced panels from China, industry representatives said.

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image via Shutterstock

And existing damage to the US industry, which has forced around 25 companies to close or downsize since 2010, makes it harder for their suppliers to recover from sharply reduced orders in recent months.

One of the victims is Valtech Corp., a Pottstown, PA maker of specialty chemicals for the photovoltaic industry, which has seen revenues slump by about 50 percent since mid-2012, said President Richard Girard.

“The PV industry is on a race to the bottom,” Girard told AOL Energy. “No-one is running at full capacity.”

He said the tariffs are unlikely to help his revenues because many of his PV clients have gone out of business, and because prices for solar panels and their components “keep going down”. The US government’s tariffs are too little and too late, he said.

Girard said the market is overwhelmed by Chinese capacity and by subsidies that unfairly favor Chinese manufacturers at the expense of independent US competitors.

Valtech is “very significantly” dependent on the PV industry but will survive because it also sells to other industries including semiconductor manufacturers. “If we were 100 percent dependent on PV solar we would be in serious trouble,” Girard said.

But low-cost panels are creating lots of business for solar installers, he said. “Installers are very busy because there are a lot of panels out there that are very cheap.”

Jigar Shah, president of the Coalition for Affordable Solar Energy, which opposes the tariffs, predicted they will not help the US industry because overseas competitors will still be able to produce solar panels more cheaply than US companies.

“The tariffs will have no perceptible influence on the US solar industry,” said Shah, whose organization represents downstream players including some solar installers.

At the margin, he said, the tariffs have resulted in solar panel prices remaining broadly unchanged since the duties went into effect, preventing a further decline.

Despite the doubts about the tariffs’ effectiveness, the leading US manufacturer SolarWorld welcomed the action and said it was seeking ways of closing the loophole that allows Chinese manufacturers to avoid the duties.

“The tariffs are helpful even if they do not counter the full extent of China’s illegal trade practices,” said Ben Santarris, a spokesman for Solarworld, which submitted the trade case on behalf of 227 companies.

Santarris said the group is in discussions with the Department of Commerce, the US Trade Representative, and US Customs about ways of closing the loophole in the trade regulation, and is monitoring reports of efforts to circumvent the tariffs.

“This was the first substantive step to stop the illegal land grab by the Chinese,” he said.

But China-based Suntech, the world’s biggest solar manufacturer, said protectionist measures drive up prices, deter investors, and create inefficiencies in the industry.

“We are concerned about the continued growth of trade barriers,” said Walker Frost, a spokesman for Suntech.

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