Analysis: Threatened duties push China solar firms offshore

Mon Oct 1, 2012 1:12pm EDT
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By Krishna N Das and Swetha Gopinath

(Reuters) - Chinese solar companies are being forced to speed up plans to move a big chunk of their manufacturing offshore as Europe looks increasingly likely to join the United States in implementing duties on imports of Chinese-made solar equipment.

The timing could not be worse for the Chinese firms, whose balance sheets are already being strained by nearly two years of weak prices and slowing demand for solar energy products.

The risk now is that they will lose much of the cost advantage that has been the basis for their dominance of global solar industry, analysts and investors say.

At stake in Europe is a market that was worth $27 billion to the companies in 2011 -- about a third of their production and about 7 percent of all Chinese exports to the European Union.

The European Commission is investigating whether Chinese solar companies are selling below cost, or "dumping", in the world's biggest solar market. European companies have complained that their Chinese rivals benefit unfairly from subsidies.

China's state-run banks have extended billions of dollars of credit to solar companies. And even on the day the EC subsidy complaint was announced last week the China Securities Journal reported that China Development Bank Corp CHDB.UL would prioritize loans to 12 top solar companies.

Some experts expect Europe to go further than the United States, which imposed a preliminary duty of about 30 percent on panel imports from China in May.

The U.S. measure is considered to have been largely ineffectual because it applied only to solar cells, not the completed panels. This means Chinese companies can import cells to China from third countries and then export the completed panels in the United States free of anti-dumping duties.   Continued...