Volume/ Price Quota by China

Europe recently negotiated with China to set up a volume and price quota for solar panels imported from China. This was done to stop a potentially highly damaging trade war between these two blocs and prevent the complete decimation of the solar manufacturing industry in Europe. Europe set up a volume quota of 10 GW of imports per year from China, with a floor price on solar panels of 55 eurocents/watt. China which imports a large portion of the raw material used to make crystalline solar panels had also decided to retaliate by putting duties on imports from Europe and USA. The deal with Europe had made China defer the poly duties on European made poly, while going ahead with duty imposition on USA made poly.

China is now all set to impose some sort of restrictions on poly imports to protect its domestic Polysilicon industry. Note Chinese producers have not been very successful at establishing a strong poly industry, though they have been very good at establishing global leadership in others parts of the solar supply chain. Except for GCL Poly (GCL), no Chinese company can claim a position in the top 5 global poly producers. LDK Solar (LDK) and Yingli Solar (YGE) have burned through millions of dollars of money and have had to write off massive investments made in poly factories. Numerous small companies have shut their poly plants as their costs are much higher than the $20-22/kg spot prices of poly, prevailing today. Despite a massive jump in solar panel demand, poly supply has proved to be adequate as large producers have ramped up their utilization. Capacity still remains quite large compared to the demand in 2013. However, supply may come under pressure if demand jumps to 50 GW in 2014 as many expect it to. Poly prices can jump pretty fast if that happens, as poly producers have stopped expansion in the last one year. The Chinese producers want the government to set a floor price of $26/kg, which does not make sense given that the international prices are almost 20% below today.

Digitimes

 China-based polysilicon makers are poised to recommend that the China government set a floor import price of US$26/kg for Europe-produced polysilicon in place of imposing anti-dumping tariff rates, according to PV industry sources in Taiwan.

The China government in late January 2014 made preliminary judgment that polysilicon imported from Europe for sale at low prices had injured the domestic polysilicon manufacturing industry but decided not to impose anti-dumping tariff rates due to political considerations, the sources indicated.

The recommended floor import price of US$26/kg is higher than current spot market quotes of US$20-22/kg and February contract prices of about US$23/kg, the sources noted.