Solar Trade War Flares Up, Trina Drives Consolidation
As if the solar trade war between the US and China wasn’t bad enough, tensions just got worse with a preliminary ruling in Washington aimed at closing a loophole to a previous ruling imposing anti-dumping tariffs on Chinese solar panels. I’ll admit I was a bit surprised by the preliminary ruling just announced by the US International Trade Commission (ITC), as I’d previously predicted this latest action in the Sino-US solar trade dispute would quickly fizzle. Meantime, industry consolidation is continuing in China, where more than half the world’s solar panels are currently made, with word that Trina (NYSE: TSL) is buying a controlling stake in another smaller rival.
I said above that the ITC’s latest move surprised me a bit, but what certainly hasn’t surprised me has been China’s defiant protest at this latest development. I obviously don’t know what’s happening behind the scenes, but at least on the surface it appears that Beijing has done little or nothing to try and address western concerns underlying this 2-year-old trade war. Those concerns center on allegations by the US and Europe that China unfairly supports its solar panel makers by providing a wide range of government subsidies ranging from low-interest bank loans to cheap land for building new factories.
Rather than try to find a solution that would satisfy these western governments, Beijing is embarking on its own building spree for new power plants that could raise further complaints of unfair government support. Meantime, this new purchase by Trina should be a welcome development, but could also raise new tensions since the company is probably paying little or nothing for its controlling stake in Hubei Hongyan, which itself is most likely a state-run enterprise.
All that said, let’s take a look at the latest development in Washington that saw the ITC make a preliminary determination that Chinese-made solar panels that use Taiwanese components may violate fair trade principles. (English article) That determination means the case can go forward, and a final ruling could come later this year. Washington last year imposed punitive tariffs on Chinese-made solar panels after the ITC determined that Chinese producers received unfair government support. But China-made products using key components from Taiwan were exempted from the ruling — a loophole that the US arm of German producer SolarWorld is now trying to close.
SolarWorld was predictably pleased at the initial ruling (company statement), but others were less thrilled. A group representing US installers of solar panels, the Coalition for Affordable Solar Energy, said that closing the loophole would drive up prices for everyone, since China produces so much of the world’s supply. Beijing has yet to formally react to this latest development, but late last month called on Washington to stop the probe and said it has “serious concerns.”
Meantime in the day’s other solar news, Trina has announced it will acquire 51 percent of solar panel maker Hubei Hongyan from its parent, Shenzhen S.C. New Energy Technology. (company announcement) No financial terms were given, which means that Trina is probably paying very little for the stake, or possibly even getting it for free. That wouldn’t come as a huge surprise, since the company has relatively modest manufacturing capacity of 50 megawatts per year, and is probably losing lots of money.
I’ve had a look at Shenzhen S.C.’s website, and there’s no indication of whether it’s a state-owned company. But I would be willing to bet it is, though its parent is probably making the sale out of commercial pressure rather than pressure from Beijing. Still, a foreign buyer almost certainly would never have been considered for this sale, and Beijing in general has shown no signs of encouraging a more open and commercial-oriented approach for the market. Until that changes, look for tensions to continue to simmer, slowing development of this important sector that will be critical for the world’s future energy security.
Bottom line: A new preliminary ruling from the US will boost tensions between Beijing in a long-running trade dispute over solar panels, benefiting nobody.
Related posts:
