On July 18, China’s Ministry of Commerce imposed preliminary AD (anti-dumping) duties on US and Korean polysilicon makers. The duties ranged from 2.4% to 57%. Four of the Tier 1 polysilicon makers have been sanctioned at the following rates.
- Hemlock: 53.3%
- OCI: 2.4%
- REC: 57%
- SunEdison (formerly MEMC): 53.7%
These preliminary duties are likely to provide significant challenges for the Tier 1 US producers, but are expected to have only minimal impact on polysilicon prices.
With the PV trade deal between China and Europe currently appearing to allow Chinese suppliers to avoid duties when exporting to Europe, it is now expected that polysilicon manufacturers in Europe (especially Wacker) will not receive high tariffs from the ongoing AD/CVD (countervailing duties) investigations by China into poly imports. Wacker is the second-largest polysilicon producer after China’s GCL. Korea’s OCI is the third largest polysilicon producer, and its price competitiveness will be minimally affected by the low tariff rate.
Using analysis presented in the recent NPD Solarbuzz Polysilicon and Wafer Supply Chain Quarterly report, there will still be sufficient ‘unaffected’ polysilicon production to meet China’s forecasted demand for the next two years, even factoring in the new tariff regime.
As shown in the figure, projected production from Chinese domestic producers, plus that of Wacker and OCI, should be sufficient to meet local Chinese polysilicon demand. Furthermore, if demand is compared to total available capacity, there is a substantial surplus. This implies that, even if demand is greater than forecasted, polysilicon producers can make up the difference simply by increasing plant utilization.
Figure 1 Polysilicon Supply/Demand Analysis Considering Chinese AD Tariffs
Source: Solarbuzz Polysilicon and Wafer Supply Chain Quarterly
Polysilicon spot prices could see some increase as buyers and sellers adjust to accommodate the duties. However, with sufficient production, price increases are forecast to be minimal and only in the short term. Since the July 18 announcement, a few cases of increased price quotes have been reported, though there is currently little evidence of significant upward price pressure. And if prices do increase, it may encourage polysilicon makers to raise production levels, alleviating price concerns.
The long-term impact of Chinese polysilicon import tariffs is not yet clear, and the current AD duties are only preliminary and countervailing duties are still under investigation. There may also be some loopholes in the tariff regime that could be exploited. Furthermore, if Chinese domestic polysilicon prices were to increase significantly, downstream c-Si wafer/cell/module manufacturers located outside China could stand to benefit. Currently, China’s Ministry of Commerce appears to be focused on a compromised solution, with a variety of both internal and external factors having an influence.
Ultimately, AD/CVD duties on a portion of imported polysilicon are likely to benefit the vested interests of a few Chinese producers, penalize some foreign makers, and have a minimal effect on the industry as a whole moving forward.