Analysts believe the announce tariffs of 2.4 to 57 percent on specific U.S. polysilicon manufacturers was retaliation for the U.S.’s 30 percent tariff on solar panels imported from China.
Industry leaders hoped for a political solution to the trade standoff, but none has come after a month and some producers are saying they might have to start letting workers go.
The Seattle Times reported today that REC Silicon, ranked as the world’s fifth largest polysilicon producer, will struggle to keep its Central Washington plant in Moses Lake, Wash. open if the tariffs remain. The plant employs 500 workers and 80 percent of the silicon it produces sells to Chinese solar panel manufacturers.
The manufacturers use the material to build solar panels and will likely find new suppliers now that REC’s silicon is taxed at 57 percent, making it less competitive than domestically-produced polysilicon or even that imported from Europe.
“This is potentially a massive blow to our business,” REC general counsel Francine Sullivan told the Seattle Times. “We’re doing all we can to keep going, but we can’t manage too much longer without government help.”
However, the issue grows increasingly complex as China moves forward with reforming its own polysilicon industry.
The tariff might have started as a retaliatory action against the United States and its move to level the playing field for domestic solar module manufacturers. The U.S. initiated the 30 percent tariff in response to formal complains from U.S. manufacturers that Chinese producers were selling their solar panels in the U.S. for less than they cost to build.
While China’s new tariff on outside silicon could look vindictive and might have started out that way, the country’s leadership clearly took a strong look at the industry and found plenty of room for improvement.
The Chinese government has announced plans to reform the country’s polysilicon industry by “nurturing” efficient and competitive manufacturers while allowing less efficient companies to fail, according to PVTech story published earlier this month. Analysts say the move is likely to cull the industry.
“Most producers will be eliminated rather than acquired,” Lu Jinbiao, a senior official at China’s GCL-Poly Energy, told Reuters. “Large amounts of ineffective, high-cost production capacity will exit the market.”
As the new tariff on imported polysilicon is part of a larger plan to restructure the industry, it seems trade negotiations could become increasingly difficult.