Financial Services Association, May 16 (Reporter Liu Mengran) Southeast Asia's two-year “anti-evasion” exemption is about to expire. Today, the US White House issued a statement to take further control measures against imported photovoltaic cells on the grounds of so-called unreasonable trade. According to the China Trade Remedies Information Network, the US International Trade Commission (ITC) is expected to issue a preliminary ruling on industrial damage in this case no later than June 10, 2024.

In response to a reporter from the Financial Association this evening, several leading component manufacturers mentioned that they are closely monitoring the progress of related events, but the specific impact is still uncertain. Lu Biao, deputy director of the silicon industry expert group of the China Nonferrous Metals Industry Association, told the Financial Federation reporter that the two-year exemption will expire and may begin to be implemented, but Southeast Asia has already been equipped with silicon wafers in these two years. Next (the US side) may directly launch a “double reverse” investigation into Southeast Asia PV.

Southeast Asia has completed silicon wafer production capacity

The issue of trade barriers to exports of Chinese photovoltaic products to the US has been around for a long time, and can be traced back to 2012. Over the next ten years, the US continued to introduce trade policies such as 201 tariffs and 301 tariffs to suppress exports of Chinese photovoltaic products to the US. In response, Chinese photovoltaic companies are starting to build production capacity in Southeast Asia one after another to avoid “double reverse” investigations.

The most recent anti-tariff avoidance investigation dates from 2022. Local US companies wanted the US Department of Commerce to launch an anti-tariff avoidance investigation on solar products from Malaysia, Thailand, Vietnam, and Cambodia. According to the final ruling, the US exempts four Southeast Asian countries from tariffs for 24 months. This policy will expire in June of this year.

According to today's news, specific control measures include no longer excluding solar bifacial modules from tariffs, resuming tariffs on solar products from Cambodia, Malaysia, Thailand, and Vietnam after June 6, and requiring installation to be completed within 6 months to crack down on product hoarding, and adopting subsidies and other measures to support technology development for photovoltaic cell silicon wafers and battery manufacturing within the US.

According to the China Trade Remedies Information Network, the US International Trade Commission ruled that the import of the products involved in the case posed substantial damage or threat of substantial damage to the US domestic industry. The US Department of Commerce will continue to investigate the case and is expected to issue a preliminary countervailing ruling on July 18, 2024, and a preliminary anti-dumping ruling on October 1, 2024.

A Finance Association reporter noticed that previously, under the impact of high tax rates, domestic component manufacturers went overseas to Southeast Asia. After several years of construction, Chinese enterprises have now successively achieved an integrated production capacity layout for silicon wafers, batteries, and modules in Southeast Asia.

In particular, in the silicon wafer sector, according to public data from leading component manufacturers, JinkoSolar (688223.SH) has a 6.5GW+3.5GW annual production project in Vietnam; Longji Green Energy (606012.SH) Malaysia 6.6GW silicon rod project is progressing in an orderly manner; Jingao Technology (002459.SZ) has formed 2.5 GW of crystallizing and slicing production capacity in Vietnam; and Tianhe Solar (688599.SH) has built manufacturing bases for photovoltaic products in Thailand and Vietnam, with an integrated production capacity of 6.5 GW of wafers, batteries and modules.

In addition, glass, backplane and other auxiliary materials companies such as Xinyi Solar (00968.HK), Mingguan New Materials (688560.SH), and Huitian New Materials (300041.SZ) also have production capacity in Southeast Asia. According to industry insiders, the main conditions for judging “evasion” include the use of silicon wafers produced in China to manufacture solar cells, and that the photovoltaic modules contain at least three auxiliary materials made in China. Therefore, silicon wafers or auxiliary products produced locally in Southeast Asia may not be deemed to have “anti-circumvention” behavior. However, there are also concerns from industry insiders that it remains to be seen whether the relevant certification rules will be adjusted after a new round of restarting the investigation.

Lu Biao mentioned that US and South Korean companies also have a lot of production capacity in Southeast Asia. After blocking Southeast Asian production capacity, the domestic supply of photovoltaic products in the US is still a problem.

Plans to build a factory in the US are still in progress

Previously, Chinese photovoltaic companies had always exported to the US through Southeast Asia, and the four countries had different dumping rates. Among them, Vietnam had the highest dumping margin, reaching 271.28%; Cambodia, Malaysia and Thailand reached 125.37%, 81.22%, and 70.36%, respectively. According to US statistics, the amount of investigated products imported by the US from the countries involved in the case in 2023 was about 2.3 billion US dollars from Cambodia, 1.9 billion US dollars from Malaysia, 3.7 billion US dollars from Thailand, and 4 billion US dollars from Vietnam, respectively.

In anticipation of restarting the “double reverse” investigation in Southeast Asia, the leading component factory has also been advancing plans to build a US factory in recent years. At the special PV performance conference held this month, Tianhe Solar said that its 5GW US module production capacity is already under construction and is expected to be gradually put into operation in the fourth quarter of 2024; JinkoEnergy's US 1GW expansion of N-type module production capacity was put into operation in the first quarter, and the remaining 1GW production capacity has already entered the equipment installation stage. This production capacity will help future US market shipments. In addition, Longji Green Energy's 5GW module production capacity was put into operation in the first quarter, and Jingao Technology plans to start production in the third quarter.

However, it should be noted that the above production capacities are all component parts. Lu Jingping believes that the component factory is experimental, and that the cost and construction cycle of the US plant are higher than at home. Moreover, if it is only components and batteries, not the entire industry chain is in the US, and other supplies are imported from China, it is uncertain whether America's IRA subsidy policy can be put in place.

Just this week, on May 14, local time, the US White House announced additional tariffs on a range of Chinese products such as solar cells, electric vehicles, computer chips, and medical products. Among them, tariffs on photovoltaic cells and modules were raised from 25% to 50%.

However, after years of hierarchical trade barriers, the share of direct exports of new energy products to the US is extremely low. According to Chinese importers and exporters of mechanical and electrical products a few days ago, China's photovoltaic cells also accounted for only 0.2% of exports to the US due to the US crackdown in the early stages. The imposition of tariffs will not have a big impact on the overall export data of China's electric vehicle and photovoltaic cell industry.

The China Electromechanical Chamber of Commerce also mentioned a few days ago that this move undermines globally recognized trade rules. The imposition of tariffs on related products by the United States will push up product market prices and increase the burden on consumers; damage industry globalization and collaborative innovation; and drag down the global scientific and technological innovation process.