China Begins Probe into U.S., Korean Solar Exports
07/20/2012| 07:26am US/Eastern
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--China's solar exports to U.S. decline in April, May
--Top equipment maker's revenues down amid lower prices, sales
--Major solar markets struggling overcapacity, weak demand
BEIJING--China's Commerce Ministry on Friday said it is investigating possible solar equipment subsidies by the U.S. and South Korea and their impact on Chinese manufacturers, widening a trade spat at a time of oversupply and weakening demand for solar power equipment.
The ministry has launched an anti-dumping and anti-subsidy probe into polysilicon imports from the U.S., as well as an anti-dumping probe into imports from South Korea, it said in a statement on its website.
The investigation follows a request by leading domestic polysilicon manufacturers, including LDK Solar Co. (>> LDK Solar Co., Ltd (ADR)) and China Silicon Corp., state-run news agency Xinhua reported Friday, adding that it will be completed before July 20, 2013 but may be extended for another six months under special circumstances.
China's top solar producer Suntech Power Holdings Co. (>> Suntech Power Holdings Co., Ltd. (ADR)) reported a loss in the first quarter, while its revenue dropped by more than half from a year earlier amid lower prices and sales.
Major solar markets such as the European Union, the U.S. and China, which are struggling with oversupply and weak demand, have been trading anti-dumping allegations against each other.
In May, China said preliminary findings from a probe of six clean-energy projects in five U.S. states showed violations of international trade law.
The U.S. in March imposed preliminary anti-subsidy duties of 3%-5% on Chinese solar panels, followed by anti-dumping tariffs ranging from 31% to nearly 250% in May.
As a result, Chinese solar sales to the U.S. fell 45% in May and 64% in April from year-earlier levels to $124.1 million and $70.7 million respectively, the Coalition for American Solar Manufacturing (>> CAS Medical Systems Inc) said.
German solar panel maker SolarWorld AG, which was among companies complaining about Chinese trade practices, said in June that it would file a complaint with the E.U. on Chinese competitors selling products at prices far below production cost, a move opposed by China.
Solar equipment companies worldwide have been struggling with tough market conditions. Debt-laden EU nations, which together comprised the world's largest solar market last year, have slashed support for solar power production, hitting demand for equipment despite a fall in component prices.
Recently, Germany's Q-Cells SE (>> Q-Cells SE), Solar Millennium AG (>> Solar Millennium AG), Solon SE (>> Solon SE) and Solarhybrid AG (>> SolarHybrid AG) all filed for insolvency. Last year, U.S. manufacturer Solyndra LLC filed for bankruptcy.
Robert D. Hansen, President and CEO of U.S. silicon major Dow Corning Corp., said he was "disappointed that the U.S. and China have yet to negotiate a sustainable, mutually beneficial settlement" on solar trade issues. "No country or industry wins when trade disputes escalate."
"The dispute could lead to higher costs and potentially less globally competitive solar products from China. More than $1 billion of U.S. exports and potentially thousands of U.S. jobs across the solar value chain are at risk."
--Paul Mozur contributed to the article.
Write to Sarah Chen at Sarah.Chen@dowjones.com
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