China has long led the world in the manufacture of solar panels, the manufacture of which requires polysilicon. For years, China has felt that both the United States and South Korea have been dumping the material in China below cost and is ready to impose tariffs of up to 57 percent on certain types of polysilicon as early as this month.


The U.S. units of Renewable Energy Corp ASA (REC) are among companies to receive the highest rate of tariff and South Korea’s OCI Oci Co Ltd (KRX:010060) will have the lowest at 2.4 percent, according to a statement on the Chinese commerce ministry website yesterday. And this protectionist stance will not be something that is considered for weeks in negotiations but rather will force importers to begin paying the duties on July 24.

U.S. Introduced A 250 Percent Tariff

Following the bankruptcy of Solyndra LLC of Freemont, California and others, the United States introduced a tariff of up to 250 percent on Chinese-made solar panels just last year. This action by China is believed to be the preliminary step following a probe it launched following the U.S. decision to impose duties on solar panels.

Timothy Lam, a Hong Kong-based analyst with Citigroup Inc. said yesterday in a note to investors that this will raise the price of domestically produced solar-grade polysilicon and be a “positive” for companies like GCL-Poly Energy Holdings Limited.(HKG:3800).

The highest tariff “on any company will be a fairly difficult blow,” Michael Parker, a Hong Kong-based analyst at Sanford C. Bernstein & Co. said yesterday by phone with Bloomberg. “There’s no way that module manufacturers can tolerate a 57 percent increase in polysilicon price.”

Chinese Producers To Benefit

Additional Chinese producers that will benefit from the tariffs include: GCL-Poly Energy Holdings Limited. (HKG:3800), Daqo New Energy Corp (NYSE:DQ) and ReneSola Ltd. (NYSE:SOL). On the other side of the Pacific, First Solar, Inc. (NASDAQ:FSLR), SunPower Corporation (NASDAQ:SPWR) will in all likelihood suffer immediately. Each of these companies was profiled in a piece we did on EU Solar Tariffs.

The United States was of course dismayed at the Chinese decision as talks are ongoing to deal with a broader solar trade concerns.

“As we have noted, we are in discussions with China related to global issues in solar technology, including panels and polysilicon, and are dismayed that China would take this step in the midst of those conversations,” a spokeswoman for the U.S. Trade Representative’s office said.

“We have just received the notice (of China’s intent to impose the duties) and will analyze it carefully for compliance with WTO rules,” the spokeswoman said.