China PV: just blocked from the bleak to profit

Abstract Bad news comes one after another. On June 3, the US Department of Commerce announced the preliminary results and found that there were subsidies for crystalline silicon photovoltaic products imported from China. In the preliminary ruling, the tax rates of the two mandatory responding companies were 35.21% and 18.56%, respectively. ...
Bad news came one after another.

On June 3, the US Department of Commerce announced the preliminary ruling and found that there were subsidies for crystalline silicon photovoltaic products imported from China. In the preliminary ruling, the tax rates of the two mandatory responding companies were 35.21% and 18.56%, respectively. It is 26.89%. After the preliminary anti-subsidy ruling, the US Department of Commerce will also announce the anti-dumping preliminary ruling on July 28.

This is the second "double-reverse" investigation conducted by the United States against Chinese PV companies after the "double anti-" (anti-dumping, countervailing) tariffs imposed on Chinese PV products in 2012.

At the same time, Europe has also taken the opportunity to attack China's PV products again. In the worst case, the anti-dumping agreement signed by the EU and Chinese producers in 2013 will probably fail.

Since 2014, the photovoltaic industry has gradually stepped out of the trough, and China's PV companies' financial reports have begun to move from bleak to profitable. At this time, European and American PV manufacturers have successively launched difficulties, intending to chase and intercept Chinese enterprises, and Chinese PV companies are facing an unprecedented fierce battle.

External trouble: market barriers or harder

In the past two years, China's PV companies have repeatedly suffered in overseas markets.

In 2012, China and the United States doubled the battle to limit the restrictions on the origin of Chinese enterprises' batteries. In 2013, after the Sino-European pair struggled to impose quotas on China, the 2014 storm resurfaced.

In January 2014, German photovoltaic company SolarWorld filed an application with the United States in the United States for a second “double-reverse” investigation on imported PV products from China. The US Department of Commerce launched the response in the month.

Ding Wenlei, executive director of Hangyang Solar, told the China Business Journal that after the United States issued a decision on the origin of the cell's origin determination component in 2012, most of the domestic mainstream manufacturers exported to the United States began to use Taiwanese batteries. This has also caused Taiwan's new solar and other battery manufacturers to double their profits in 2013. Taiwan’s exports have increased sharply, while the mainland’s battery capacity operating rate is less than 70%.

At the same time, according to Ding Wenlei, in 2013, the EU quota for China's PV companies was 7GW, but this amount of domestic enterprises simply did not run out, in fact only used five or six GW. "Because, the minimum price for Chinese companies to export to the EU is 0.56 euros, but Korean products are 15% lower than us. Malaysia is 5% lower than us. Because the price is fixed, our products are difficult to compete with other countries. ."

This time, the impact may be wider. Sun Guangbin, deputy secretary general of the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products, told this reporter that unlike the previous one, the US double counter is mainly aimed at purchasing components assembled in Taiwan and other third-country batteries in mainland China. The path for Chinese companies to export to the United States.

"Last year, 20% of our products were exported to the United States, about 3GW. If this road is blocked, it will have a great impact on some domestic enterprises. More importantly, the development of the North American market is very rapid, and it has become China and Europe. Outside the third largest market, it is expected that the installed capacity in North America will exceed 7GW this year. If the US market does not enter, it means that we have lost the dominant position in the future in this region." Ding Wenlei said.

Internal worry: investment boom or difficult to sustain

With Chinese companies hitting the European and American markets, China has become an important emerging market, but at present it still has many problems.

In Ding Wenlei's view, since 2014, due to the double-reverse investigation, the domestic PV modules exported to the United States have been decreasing, and the amount of 3GW that is vacant needs to be allocated to other markets. In 2013, Japan installed 5GW, of which China imported two or three GWs, and the market capacity was basically full. The EU can't absorb more because of the quota system. The African market and the South American market have just started to start, and it is even unable to absorb this 3GW. Therefore, the main hope is that it will fall into the domestic market.

An industry insider said that in 2013, the installation of the domestic market was between 8 and 10 GW, but the arrears and subsidies were still very serious. "Because of the layer-by-layer review, it is quite normal for some enterprises to invest in PV power plants to be in arrears for one year. However, some power plants in the western region have been built, but the power grid cannot be loaded, or the power companies have no ability to acquire them. The abandonment rate is 90%, and the income of some enterprises that invest in power stations is not enough for travel expenses."

Atsian Sunshine Power CEO Xiao Xiaoying told this reporter that the company's current power station investment focus is still in overseas regions such as Canada, and the country is not the focus. “In overseas markets, there are a whole set of mature processes and methods for financing, construction and sales of power stations, and they can all be sold at good prices. For example, in Canada, the last purchasers of power stations are basically pension funds and insurance. ) company, etc."

The aforementioned Jiangsu PV executives also said that the financing cost of investing in PV power plants abroad is around 4%, while in Japan it is lower at around 2%, while domestic financing costs are high due to various complicated problems. "Now many companies invest in photovoltaic power plants in China just to sell sales performance, it is difficult to profit from it. If this situation does not change, the construction boom of this domestic power station is difficult to sustain."

Countermeasure: Win-win or double lose?

Establishing factories overseas and exploring emerging markets are the main methods for China's PV companies to respond to the US and Europe.

A former Wuxi Suntech executive revealed that before 2013, the company once occupied a 20% market share in the US market, but most of the components are still dependent on the domestic market. After the US double-reverse in 2012, the company began to purchase Taiwanese batteries to avoid trade barriers. “Overseas construction seems to be feasible, but it is difficult to work in practice.”

The supply of supporting facilities and raw materials is a serious challenge. In the opinion of the above-mentioned people, so far, many companies' overseas construction attempts have not been successful. “Because PV is an industry that needs close cooperation between upstream and downstream, we can build factories in the United States to circumvent these trade rules, but labor costs and raw material costs will remain high and it will be difficult to compete in the market, and if it is built in Africa. When the country does not talk about political risks, there is basically no decent supporting facilities, and the raw materials will be shipped from China around half of the world."

“So the best way is to spread the risk and open up more markets,” said the source. According to the data, in 2013, the proportion of China's PV products exported to Europe has dropped from 70% of the highest value to 30.26%. The Asian market has replaced it with 44.78%, and from January to February 2014, European exports. Has been reduced to 22.56%.

Xiao Xiaoying told reporters that since 2012, Europe and the United States have caused a large number of workers to lose their jobs, which has also dragged down the development of the domestic PV market. According to the report of the European Photovoltaic Industry Association, due to the EU's "double opposition", the EU's annual installation in 2013 was down 16% from the beginning of the year. "So we still hope that we can properly resolve the trade disputes between the two countries, and win-win rather than lose."

Some PV companies revealed to reporters that a leader of the Electromechanical Chamber of Commerce has prepared to go to the United States recently to negotiate with the US Department of Commerce to express the demands of Chinese companies. It is reported that on December 11, 2014, the US Department of Commerce will announce anti-dumping and counter-subsidy final rulings. On January 26, 2015, the US International Trade Commission will finally decide whether to levy taxes. The future success or failure geometry is still unknown to Chinese PV companies.

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