EU "double-reverse" preliminary ruling accelerates China's PV industry integration

The EU will announce the “double anti-counterfeit” (anti-dumping and countervailing) investigations for Chinese PV companies in the near future, and it is expected to become the “last straw” that will crush many Chinese companies. From the second half of the year, China’s PV industry will have a wide range of integration tides. Will emerge.

The Chinese government and the photovoltaic industry organizations have recently lobbied the EU, Germany and other heavyweight governments to support the Chinese PV industry. Many PV industry insiders still have optimistic expectations for the results. However, from the current situation, the EU's preliminary decision may not be ideal. If the class is punitive, many Chinese PV companies will have to withdraw from Europe, the world's most important PV market.

After the two major markets in Europe and the United States are blocked, Chinese companies will switch to domestic domestic markets and developing countries such as Africa, but this is not enough to digest the huge capacity of domestic PV companies. It is foreseeable that in the future, the closure of production capacity or integration by PV companies may become the norm.

"Some companies are weak in the European market, then they will switch to other regions or do the Chinese market. If the market can't do anything, then it can only wait for death," said Gu Lijun, an industry analyst at industry consultancy iSupply.

The European Commission has initially agreed to impose punitive tariffs on imported Chinese PV products on the 8th, and the average tariff rate will be set at 47%. At the meeting held in Brussels on the 15th, the EU sought the opinions of all EU national trade commissioners, and announced the preliminary results before June 6, and the final decision in December.

In the European market, the installed capacity of photovoltaic products accounted for 60% of the global total, and Chinese-funded enterprises have gained more than 80% of the market share in the European market. In 2011, the value of PV products exported by Chinese companies to the EU reached 21 billion euros. Some insiders pointed out that the EU's double-reverse investigation of China's PV products will be the biggest trade war between China and Europe.

However, many Chinese PV companies and industry experts still expect the EU's preliminary ruling in early June to bring some surprises.

"It is still possible to work through the efforts of all parties," said Shi Dingxi, the State Council Counselor and Chairman of the China Renewable Energy Society. The Chinese Ministry of Commerce has recently consulted with the EU, and industry associations and companies have conducted through various channels. Propaganda and liaison, and even pulled foreign companies to be allied forces.

The EU is detrimental to the Chinese or the counterattack

For the EU double-reverse investigation, many PV companies in China believe that it is “killing one thousand, self-destruction of eight hundred”, because this will significantly increase the installed cost of the European PV market.

China's large-scale photovoltaic cell and module manufacturer Trina Solar said in a written statement to Reuters that once Europe imposes punitive tariffs on PV products imported from China, it will have a very negative impact on the global PV industry value chain. In particular, it hurts the upstream and downstream industries in Europe.

"As a supporter of free trade and an advocate of open cooperation, Trina Solar supports the settlement of trade disputes through negotiation and negotiation, and expects relevant departments of China and the EU to actively communicate and reach a solution that is in the common interest of all parties," The statement pointed out.

Yao Jian, spokesman of the Chinese Ministry of Commerce, also said recently that he hopes to resolve the Sino-European PV trade dispute through dialogue and consultation, and expressed his firm opposition to the EU's restrictions. He hopes that the EU will treat this matter with caution and China will safeguard the interests of Chinese enterprises.

According to Gu Lijun, in the European market, the price difference between Chinese-made components and locally produced components in Europe is about 30%-40%. Obviously, 47% of the punitive tariffs are obviously high.
He believes that once the EU has imposed a preliminary ruling on high tariffs, China may respond.

"High tariffs on the EU side, if the cost of raw materials rises again, China's midstream manufacturers will be burned at both ends," he said.

The photovoltaic industry chain consists of upstream silicon wafers, mid-stream photovoltaic cells and components, downstream PV module installation and power station development. Chinese companies have a leading position in midstream manufacturing, and many global manufacturers such as Trina, Suntech and Yingli have emerged.

Expanding the new market to accelerate integration

Shi Zhengrong, co-chairman of the Asian Photovoltaic Association and director of Suntech Power, pointed out that the double-counter investigations in the United States and the European Union are worse for the already distressed PV companies in China.

China's PV industry has suffered losses in the industry for six consecutive quarters. Some companies that have expanded too fast have defaulted on debt or went bankrupt. For example, Suntech's main production base, Wuxi Suntech, was convicted and reorganized by the local court in March; The bond defaulted.

Shi Dingzhen pointed out that if high tariffs are imposed, China's PV products will not be competitive in Europe, and the EU's double-reverse investigation involves multiple production links such as batteries and components. Chinese companies have no circumvention and can only find alternative ways, such as exploring Africa. Such new markets as developing countries and BRICS countries.

“The potential of the Chinese market is huge. The key is how to quickly start the domestic market and match the domestic production capacity with demand.” Feng Dabo, president of the private energy enterprise Hanergy Holding Group, pointed out that the central government can introduce certain policy inclinations and support. Help domestic companies tide over the difficulties.

In December last year, the executive meeting of the State Council of China made guiding opinions on supporting the photovoltaic industry, such as strengthening the coordination of photovoltaic power generation planning and supporting power grid planning, and setting the benchmark electricity price for photovoltaic power plants in different regions according to resource conditions, and implementing electricity consumption for distributed photovoltaic power generation. Subsidy policy, etc. The industry estimates that several opinions from the National Development and Reform Commission and other national ministries and commissions to support the healthy development of the photovoltaic industry will be introduced soon.

Hu Rongzhu, chairman of Tongwei Solar Energy Co., Ltd. pointed out that "the development of the domestic market in the past two years is not unpleasant, but it is really embarrassing to digest so much capacity at once."

Last year, the world's new PV installations were nearly 30GW (Jiva), of which China's installed capacity reached 4.5GW. This year's estimated installed capacity is no less than 30GW. China has revised the development goals of the photovoltaic industry several times. The latest goal is to add 10GW of new installed capacity by 2015. According to industry statistics, domestic PV module production capacity is as high as 55-60GW.

Gu Lijun expects that in the second half of the year and next year, more and more enterprises will withdraw from the domestic PV industry. Only by accelerating integration and reducing some excess capacity, the profits of major manufacturers can be restored.

"If China's support policies exceed expectations, some companies will not withdraw, and the process of industry integration will slow down," he said.

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