China solar firms brace for EU dumping probe

Chinese solar companies expect the European Commission to announce within days a formal investigation into their alleged dumping of solar panels in Europe, which could result in heavy tariffs being imposed on them next year.

The expected move against the companies, whose share prices have tumbled and whose financial outlook is cloudy due to oversupply and falling solar-equipment prices, would come as they are already fighting clean-energy trade battles on several fronts.

Also, China and the European Union are at loggerheads over several other trade rows, including a European plan to punish airlines if they don’t comply with an emissions-control programme – issues that could have the potential to sour China’s readiness to help in financially underpinning Europe’s debt-laden economies.

European solar-panel makers filed a confidential complaint July 25 with the commission, the EU’s executive arm, accusing Chinese solar-panel manufacturers of selling products at below-cost prices in Europe.

“More than likely, a case will be initiated,” said Arthur Chen, general counsel at Yingli Green Energy Holding Co., YGE -3.11 percent China’s second-largest solar-panel manufacturer.

Several European companies, led by Germany-based SolarWorld AG, SWV.XE -2.35 percent want antidumping tariffs to offset a flood of Chinese panels, which have swept prices down and helped drive several high-profile German solar companies to the wall.

China exported $35.8 billion worth of solar panels in 2011, with the EU accounting for more than 60 percent of this, Chinese solar companies have said. The 27-nation EU is the world’s largest market for solar panels.

The commission has 45 days to respond to the complaint, which means a decision could be announced in Brussels as early as Friday.

“Although we saw a positive statement from German Chancellor Angela Merkel, it may take time for her statement to materialise into any positive action,” Chen said. China and Germany last week agreed to try and head off a solar-trade war, during a two-day visit by Merkel to China.

If the commission initiates an investigation, a provisional ruling is expected nine months later, followed by a final decision six months after that.

Since the complaint was first announced, shares in China’s four largest solar-panel makers have fallen between 20 percent and 46 percent. They had already been under pressure before that, in part due to a series of US provisional antisubsidy and antidumping rulings made against them in March and May.

Yingli has been preparing documents and analysing data in anticipation of the worst-case scenario, Chen said.

“We will make submissions [of questionnaires to the commission] on one hand, defend ourselves aggressively by investing in our lobbying and public-relations work and remain in close contact with representatives from the EC,” he said.

China’s Ministry of Commerce planned an emergency meeting earlier this week with Chinese solar-panel makers to discuss the possible probe but cancelled it at the last minute, said Shen Yangzi, spokeswoman at Canadian Solar Inc. CSIQ -0.38 percent The ministry didn’t immediately respond to a faxed request for comment.

Canadian Solar, which makes most of its solar panels in China, will aggressively respond to any investigation by retaining counsel in Europe if necessary, Shen said.

“A trade war can’t simply be fought by [Chinese] companies; we need involvement from our government,” she said, adding that a commission investigation was “very likely.”

Suntech Power Holdings Co., STP -0.85 percent the world’s largest solar-panel maker, is “actively lobbying the Chinese government and has joined hands with industry forces to persuade the EU to halt efforts to initiate an investigation,” company spokesman Zhang Jianmin said, without making a prediction about the ruling. “The company has been making all necessary efforts and preparing for communication ahead of any [European Commission] announcement.”

China’s panel makers previously called on Beijing to begin talks with the EU to prevent what they said would be the largest trade dispute in the history of China-Europe relations.

Four major Chinese manufacturers of polysilicon, the raw material used to make most solar panels, also urged China’s commerce ministry to begin an antidumping and antisubsidy probe into polysilicon imports from the EU.

In July, China’s commerce ministry said it had started to investigate possible polysilicon dumping and subsidies in the US, as well as claims of dumping by South Korea. Then last month it said six renewable-energy projects in five US states had violated global trade rules but didn’t say what it would do about it.

http://online.wsj.com/article/SB10000872396390444273704577633384060344606.html

 

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