Nov. 26 (Bloomberg) -- The Chinese government started investigating whether foreign suppliers of polysilicon are selling below cost in China, the world’s biggest consumer of the raw material used in making solar-energy devices.
The Chinese Ministry of Commerce said it will determine if retroactive duties, or penalties, should be imposed on the suppliers from the U.S., the European Union and South Korea. It will also probe whether the U.S. and EU are subsidizing makers of the silicon-based commodity, according to a statement today.
China is expanding the trade disagreement between the world’s biggest economies as the global solar-energy industry grapples with overcapacity, lower prices and declining profits. The stakes were raised this year when the U.S. imposed duties on Chinese-made solar cells and the EU began probing whether Chinese manufacturers are selling cells and panels at a loss.
Chinese tariffs would hurt both foreign polysilicon manufacturers and domestic wafer and panels makers, Sean McLoughlin, an industry analyst at HSBC Bank Plc, said by phone. “Tariffs would force foreign poly producers to lower prices even more while domestic manufacturers of wafers and panels would have to pay more or use locally-sourced polysilicon,” he said.
The ministry asked Korean and U.S. suppliers to provide monthly data within 15 days on the amount and value of the raw material they sold to China this year. Those from the EU were asked to give data from May.
Duties on the key material for solar panels would affect no less than four out of the five largest solar-component manufacturers, which are based outside China and cover more than 75 percent of global demand. The biggest polysilicon producer is China-based GCL-Poly Energy Holdings Ltd., which could benefit from Chinese import duties, followed by South Korea’s OCI Ltd., Hemlock Semiconductor Corp. from the U.S., Germany’s Wacker Chemie AG and Norway’s Renewable Energy Corp., Bloomberg New Energy Finance data show.
The levies could also affect Chinese makers of polysilicon wafers and the solar panels made from them, which supply about 65 percent of the products globally. In contrast, Chinese producers hold about 25 percent of global polysilicon capacity.
GCL-Poly fell 3 percent today to close at HK$1.30 a share while OCI shares were unchanged at 146,500 won a share in Seoul. Wacker closed down 2.4 percent at 43.2 euros a share in Frankfurt and Renewable Energy Corp. closed 4 percent lower at 0.67 kroner in Oslo. MEMC rose as much as 2 percent before trading 1.2 percent higher at $2.60 at 11:48 a.m. in New York.
“The big problem with imposing high import tariffs would be that it would hurt Chinese wafer makers - which still need to import feedstock - badly, a consideration likely to make the government pause,” Jenny Chase, BNEF’s head of solar analysis, said by e-mail. “With the polysilicon spot price at an all-time low, manufacturers worldwide are suffering badly and would argue that they need to drop prices this low just to keep selling.”
Polysilicon spot prices have tumbled almost 38 percent this year to a record low after dropping by two-thirds last year. The average spot price was down at $17.09 a kilogram last week, according to a BNEF survey.
Chinese Premier Wen Jiabao urged the EU in September to avoid erecting trade barriers amid its threat to impose tariffs on solar panels from China. Earlier that month, the union opened a probe into whether Chinese manufacturers sell solar panels below cost, a practice known as dumping. On Nov. 8, the EU opened a second inquiry to see if Chinese exporters receive trade-distorting government aid.
The inquiries, which are the biggest European trade dispute of its kind, cover 21 billion euros ($27 billion) of imports of crystalline silicon photovoltaic modules and the cells and wafers used in them, according to EU officials.
In October, the U.S. Commerce Department set anti-dumping duties ranging from 18 percent to 250 percent on solar-energy cells imported from China, and anti-subsidy penalties of about 15 percent, confirming a preliminary ruling earlier in the year.
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