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U.S. government antidumping penalties on imports of photovoltaic(PV) cells from China could suspend nearly half of solar moduleshipments to North America this year, impacting pricing,inventories and project timelines, according to an IHS iSuppli PVPerspectives report from information and analytics provider IHS(NYSE: IHS). The U.S. Department of Commerce on May 17 announced a preliminarydetermination in its antidumping duty investigation of imports ofcrystalline silicon photovoltaic cells from China. These cells areused in modules that form complete solar systems installed onhouses, buildings or commercial PV-generation facilities. Before this announcement was made, IHS estimated that 2 gigawatts(GW) worth of solar modules shipped into North America in 2012would be imported from Chinese manufacturers. This would haverepresented as much as 60 percent of the market for North Americanuse. Given the high tariffs proposed by the Commerce Department, manyChinese players will suspend shipments to North America whilebusiness plans are modified to account for the tariff. This couldrepresent the temporary removal of up to 1.5GW worth of stoppedshipments to the region, accounting for 45 percent of the totalmarket in 2012. "The Commerce Department action will have a major impact on theNorth American solar market, constraining supplies and driving upprices for modules and systems," said Mike Sheppard, photovoltaicsanalyst with IHS. "Even when alternative supply lines are adopted,the penalties are likely to add as much as 12 percent to the costof solar modules, lowering the average return on investment (ROI)for solar systems in the region by as much as 2.5 percent." Solar flare up The Commerce Department preliminarily determined that Chineseproducers/exporters sold solar cells in the United States atdumping margins ranging from 31.14 percent to 249.96 percent. The Commerce Department's mandatory respondents were Suntech-Powerand Trina Solar, and these two companies were subject to uniquetariff rates of 31.22 and 31.14 percent, respectively. All othercompanies singled out in the investigation received an average dutyof 31.2 percent. However, Chinese companies not singled out in theinvestigation will receive an even larger 250 percent duty. The reasoning the Commerce Department gave for the large tariff onthese players is to deter Chinese companies from forming newjoint-venture companies with existing firms that are not on thelist of penalized entities. The duties to be imposed are preliminary in nature and will need tobe finalized by both the Commerce Department and InternationalTrade Commission (ITC) through final determinations on October 9and November 23 of this year. However, these duties will be enactedretroactively 90 days prior to the date ofthe preliminary decisionin February 2012 if they are imposed. The outsourcing option Interestingly, the Commerce Department included this statement inits announcement: "Modules, laminates, and panels produced in a third country fromcells produced in the PRC are covered by this investigation;however, modules, laminates, and panels produced in the PRC fromcells produced in a third country are not covered by thisinvestigation." For the Chinese module suppliers, this represents an opportunity tosidestep the tariffs. "The Commerce Department statement means that many Chinese cellmanufacturers will be incentivized to outsource to third-partycompanies in other countries in order to get around the duties,"Sheppard said. "A popular option will be to utilize cell specialists operating inTaiwan. This will allow the Chinese players to avoid the hightariffs ranging from 34 to 250 percent. However, such a strategyalso will add 10 to 12 percent additional cost for the modules,based on the margins required from the third-party contractmanufacturers and from additional logistics charges." System-level impact The impact of the outsourcing to Taiwan will be somewhat morelimited on solar system prices compared to module prices. Systempricing behaves in a different manner from module pricing given theadditional cost elements involved. Accounting for a 10 percent increase in total module cost based onthe cell outsourcing strategy mentioned above, the cost ofinstallation for a ground solar system rises to $2.65 per watt, upfrom $2.56 per watt. As a result, the ROI for solar installations is expected to onlydecline by 1.5 percent to 2.5 percent based on the cell outsourcingstrategy. "This reduced ROI means some investors may think twice when valuingother vehicles to put their money," Sheppard said. "However, mostinvestors will not be deterred." Inventory story Solar module inventory levels will quickly deplete in NorthAmerica based on the lower shipments from Chinese players,increasing module prices as a result given that Chinese moduleswere also the most aggressively priced. These price increases willbe passed onto the system level, negatively affecting ROI forprojects installed this year. We are high quality suppliers, our products such as Pixim Cameras , China IP Network CCTV Camera for oversee buyer. To know more, please visits Waterproof IR Camera.
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