Will Anti Dumping Duties come to an end

China and USA have been lodged in a long drawn trade war over solar products, even as Chinese solar panels continue to account for a majority of USA panel market share. In 2013-14, USA imposed anti-dumping duties on Chinese solar panel imports. This was done after Solarworld launched a complaint about the unfair subsidies received by Chinese solar cell and product manufacturers. This complaint was processed by the US government, which imposed duties between 20-40% on most large Chinese solar panel makers.

China retaliated against USA by imposing stiff duties on imports of polysilicon made by USA companies. Hemlock and REC which had large polysilicon plants in USA faced the brunt of this war, leading to low utilization and losses. Europe and China did not go into a trade war coming to a resolution by imposing volume and price quotas. This has allowed Wacker to continue to export large quantities of polysilicon to China. Note China is using most of the polysilicon being produced in the world today, as most of the wafer and cell production occurs in that country. Without being able to export to China, it is very difficult for a large poly producer to survive. The other markets and users are very small when compared to the Chinese demand.

There is a small ray of hope that this long trade war might come to an end. There has been a long running court case between Hemlock and Solarworld in USA courts. This is regarding a large $770 million contract signed before 2010 between the two companies. In those days, signing long term contracts for buying polysilicon was the normal way between companies. Polysilicon was scarce and solar companies had to sign onerous terms, in order to get hold of this crucial raw material. With the poly scarcity condition improving, these contracts are no longer signed.

However, some companies are still using these contracts to extract concessions and money from the signees. A number of cases have been going in courts around the world. With the US court finding in favor of Hemlock, Solarworld will be under pressure to settle this case with Hemlock. Note Solarworld has only now returned to marginal profitability after huge losses and a bailout from a Qatari fund. It cannot hope to pay even a percentage of the $770 million that is required to be paid.

Hemlcok knows that it cannot hope to extract money from Solarworld, even if it wins the whole legal appeal process. Solarworld will declare bankruptcy and Hemlock will not get a single penny. What Hemlock wants is that Solarworld remove its petition with the US government against Chinese solar imports. This would allow Hemlock to export to China again and allow most of its under-utilization problems to be solved. Solarworld which has been the principal instigator of USA and European action against Chinese solar imports, might find it hard to swallow.

However, it might face bankruptcy if it does not settle with Hemlock. It will be interesting to see whether a small legal fight between two companies could solve an international trade war between the world’s two largest economies.