China group urges tougher restrictions on solar material imports

PUBLISHED : Thursday, 25 July, 2013, 5:32pm
UPDATED : Thursday, 25 July, 2013, 5:32pm

Chinese manufacturers are pressuring Beijing to take further measures to curb imports of raw materials used to make solar panels to help revive an ailing green-energy sector, an industry official said on Thursday.

Beijing last week slapped hefty preliminary anti-dumping duties on imports of US and South Korean solar-grade polysilicon, which analysts say have been dominating the Chinese market with pricing and quality advantages.

But any further restrictions would offer limited help to China’s struggling polysilicon sector partly because more than 60 per cent of the country’s polysilicon imports are conducted via so-called processing trade, which is excluded from any anti-dumping moves, industry specialists say.

Under the trade, foreign companies like Germany’s Wacker Chemie and South Korea’s OCI export polysilicon to bonded zones in China to enjoy official tax benefits and then use the polysilicon to make products like solar wafer, cells and panels for exports to other countries.

A Beijing-based industry lobby for China’s polysilicon sector has been urging Beijing to close the loophole and filed another petition with China’s Commerce Ministry following its anti-dumping decision last week, the industry official said.

“We have just raised this again during our communications with the Commerce Ministry,” said Ma Haitian, deputy secretary general of the Silicon Industry of China Nonferrous Metals Industry Association. “We hope they would ban polysilicon from processing trade and hence subject all imports to the anti-dumping tariffs.”

The association has been a major force pushing the Commerce Ministry to curb polysilicon imports that exceeded US$2.1 billion last year. The lobby group had been working closely with major domestic manufacturers to help the ministry collect evidence used for the anti-dumping decision.

Beijing is charging duties of 53.3 to 57 per cent on US polysilicon and 2.4 per cent to 48.7 per cent on imports from South Korea. The decision took into consideration cost pressure on Chinese solar-panel makers, analysts say.

The duties excluded sales from the European Union (EU), which accounts for more than one-third of China’s polysilicon imports, apparently because Beijing is still seeking to defuse its solar panel trade dispute with the group, they say. The EU has accused China of dumping billions of euros of solar panels in Europe below production costs and is due to decide on August 6 on whether to slap punitive tariffs on Chinese solar panels.

Chinese polysilicon producers like GCL Poly and TBEA have been suffering from massive price falls following the 2008 international financial crisis, which forced foreign governments to slash subsidies for solar power. Global polysilicon prices have fallen to below US$20 per kilogram from their 2008 peak of nearly US$400.

Domestic manufacturers have also been hurt by a spate of cheap imports from major polysilicon producers like US companies MEMC Pasadena and Hemlock Semiconductor.

Domestic solar-panel makers favour imports because the foreign raw materials are cheaper and better, Chinese solar industry executives said. Foreign polysilicon has higher purity, a key factor behind the energy conversion efficiency of solar panels.

In the first half of the year, China consumed 69,000 tonnes of solar-grade polysilicon, 41,000 tonnes of which were imports, industry figures showed. Only a handful of China’s more than 40 polysilicon makers are producing and they are only operating at a fraction of their designed capacity.

The Chinese anti-dumping tariffs may boost domestic polysilicon prices only by 10 per cent because Beijing has only issued a tariff of 2.4-2.8 per cent on two key South Korean suppliers – OCI and Hankook Silicon, analysts say.

Suppliers could also export polysilicon via a third country to China to evade the punitive tariffs.

“The help to the domestic industry from the anti-dumping will be very weak, given all the loopholes and the low tariffs on Korean imports,” Glenn Gu, senior solar analyst with consultancy IHS in Shanghai, said.