On June 6, the White House of the United States issued a statement that it will grant a 24-month tariff exemption period for solar modules purchased from Cambodia, Malaysia, Thailand and Vietnam in the future.
Previously, the United States was conducting an "anti-circumvention" investigation in Southeast Asia, and the investigation was essentially aimed at Chinese photovoltaic companies.
Unexpectedly, with the investigation, in May of this year, the US International Energy Agency stated that the speed of solar energy development in the United States had dropped by 6.8%. Half of domestic photovoltaic projects will face installation risks this year." President Biden declared a state of emergency for power security on the same day and suspended the imposition of tariffs on Southeast Asia's "anti-circumvention" investigation.
"Tariffs on the mainland and Taiwan remain in effect," the Commerce Department added. However, this is still interpreted by industry insiders as "the United States has changed its attitude towards tariffs on China". On the day of the release of the new policy, domestic PV module leaders LONGi Green Energy, Trina Solar, JA Solar, and JinkoSolar surged by 6.5%, 6.3%, 6%, and 8.9%, respectively.
As for why the US's PV policy change in Southeast Asia will stimulate the stock prices of Chinese PV companies, we have to start from the beginning.
Domestic photovoltaic enterprises will usher in growth.
A photovoltaic "vest" game
The tariffs exempted by the US government this time are "anti-subsidy and anti-dumping duties", referred to as "anti-dumping and anti-dumping" duties. The new policy does not cancel other taxes, but only emphasizes exemptions, that is, exemption from possible tariff penalties in the next two years. And said that no additional taxes will be added.
"Double anti" tax and China's photovoltaic enterprises have a long history.
In 2012, the United States conducted a "double-anti" investigation on Chinese photovoltaic cells and components, and imposed countervailing duties of 14.78% to 15.97% and anti-dumping duties of 18.32% to 249.96% on Chinese related enterprises. In the mainland, the place where photovoltaic modules are assembled is the country of origin, so Chinese manufacturers have chosen to invest and build factories in Southeast Asia, America, South America, Mexico and other places in order to avoid the "double reverse" tax. The "vest" of Southeast Asia.
In November last year, Auxin Solar, a local American photovoltaic company in California, submitted a petition to the Ministry of Commerce to increase tariffs because it could not compete with Southeast Asian photovoltaic module products in terms of price. The petition clearly mentioned China’s JinkoSolar. , LONGi, Canadian Solar, Trina Solar and other photovoltaic companies.
The petition was rejected by the Ministry of Commerce on the grounds that "these Chinese parts need to undergo substantial transformation in Southeast Asian countries and are not applicable to tariffs", but Auxin Solar did not give up, and submitted the petition again in February this year, saying that the Chinese company passed the Shifting production to Southeast Asian countries avoids U.S. tariffs on Chinese solar products, and factories in Southeast Asian countries also make extensive use of Chinese-origin cells, wafers and other components in the production process.
Finally, the U.S. Department of Commerce launched an “anti-circumvention” investigation on March 28 to verify how many components of photovoltaic modules imported into the United States came from Chinese companies. Companies will be subject to "retrospective" tariff penalties of up to 250% (249.96% based on the 12-year maximum).
However, after the investigation was opened, the negative impact may be far greater than the US government initially expected.
shot in the foot
The "anti-circumvention" tariff investigation has only been conducted for more than 80 days, and the exemption is exempted. The direct reason is that the investigation has almost brought the US photovoltaic industry into "chaos and stagnation".
A few weeks after the investigation, The New York Times reported: "Relevant photovoltaic companies have cancelled or postponed 318 photovoltaic projects in a few weeks due to concerns that the United States will impose tariffs on four Southeast Asian countries, and hundreds of companies are also considering layoffs."
Photovoltaic production in Southeast Asia is also almost paralyzed. According to a survey by the American Solar Energy Industry Association, nearly 80% of the more than 200 Southeast Asian photovoltaic industry companies will avoid US tariffs by delaying or canceling the delivery of solar modules, and nearly 70% of the companies said that at least To lay off 50% of the workforce. Since 80% of U.S. imported components come from Southeast Asia, most companies have suspended or canceled shipments, or directly raised prices, causing almost all U.S. power projects to fail, further aggravating the power supply crisis.
"One company's petition to paralyze the industry is an absurd outcome," said Hopper, president of the Solar Energy Industries Association of America. "Southeast Asia shipments have stopped, U.S. PV plant installations have stopped, and employees are starting to be fired. Circumventing' investigation hits the solar industry and undermines our nation's efforts to combat climate change."
"The Wall Street Journal" even commented that Auxin Solar has become the "most annoying photovoltaic company" in the United States.
Facing the chaos of the photovoltaic industry, 20 US state governors, 22 US senators and 85 members of the House of Representatives collectively called on Biden to immediately end the Southeast Asia tariff investigation on May 17. The U.S. Federal Energy Regulatory Commission and the North American Electricity Reliability Commission have also issued warnings that the current power production capacity cannot keep up with the substantial increase in demand, and the supply and demand are seriously imbalanced. This summer, many places will face the risk of power outages and rolling blackouts.
You know, compared to his predecessor, Biden is more proactive in addressing global warming and developing clean energy technologies. When he first took office, he set an ambitious goal to free the U.S. power industry from its dependence on fossil fuels by 2035 and allow solar power to meet 40% of electricity needs.
But as the Southeast Asian investigation progressed, that goal became elusive.
According to the U.S. Photovoltaic Market Insights 2021 Review survey report released by the Photovoltaic Industry Association (SEIA) and Wood Mackenzie, 13% of photovoltaic systems scheduled to complete deployment in 2022 were delayed by a year or more, or were canceled . The U.S. federal government says supply chain woes have left the U.S. in short supply of solar modules and equipment, with about half of all solar modules deployed across the U.S. expected to be “at risk” in 2023.
In addition, since the outbreak of the epidemic in 2020, the United States has promoted multiple rounds of large-scale bailout funds to stimulate the economy, and domestic inflation has remained high as a result, and curbing price increases has also become an important task. U.S. Trade Representative Dai Qi said on May 2 that "all policy measures will be taken to curb price surges" and hinted that reducing tariffs on Chinese goods is also under consideration. The U.S. Department of Commerce also issued a memorandum on the same day that components using overseas silicon wafers, including Chinese silicon materials, will not be subject to anti-circumvention restrictions.
In order to save its own clean energy industry, it is natural for the United States to grant Southeast Asia a two-year tariff exemption period. Most Southeast Asian manufacturers are Chinese-funded enterprises, and related products and technical support are also provided by the Chinese side, which is equivalent to giving Chinese photovoltaic companies two years of tariff relief. Duty exemption. In order to restore the enthusiasm of manufacturers to export, the White House also emphasized that PV module companies (including Chinese companies) exporting to the United States during the exemption period will not be affected by "anti-circumvention" investigations, nor will they be punished by "retrospective" tariffs.
Such good news, although it seems to have nothing to do with China on the surface, is indirectly beneficial to Chinese photovoltaic companies. It is no wonder that their stock prices rose sharply on the day of the New Deal.
Great American market, good seller in China
The two-year tariff exemption has directly boosted the confidence of my country's photovoltaic sector, and the photovoltaic index rose by 4.14% that day.
However, the policy is even more favorable to Chinese photovoltaic companies that have established factories in Southeast Asia. For example, LONGi Green Energy and JA Technology have established production bases in Malaysia and Vietnam, and Trina Solar has established subsidiaries in Vietnam and Thailand. Whether it is single-sided or double-sided modules, Southeast Asia has the lowest tariffs, and will not impose "double reverse" and other tariffs in the next two years. For single-sided modules, exports from China need to pay more than 40% tariffs, and exports from Southeast Asia only need to pay 15% tariffs; for double-sided modules, exports from China need to pay more than 25% tariffs, from Exports from Southeast Asia are 0 tariffs.
On June 6, the United States also introduced relevant policies to enhance the development of the photovoltaic industry. Examples include allowing more clean energy projects to be deployed on public lands and rolling out to urban and rural areas; will support diversification of the solar labor market through high-paying jobs and build a resilient clean energy manufacturing supply chain for allies; invest in Puerto Rico It has advanced dozens of solar projects, announced that by 2024, it will achieve 22.5GW of domestic solar capacity in the United States, etc.
Behind the policy change is a substantial increase in installed capacity demand in the United States, which will reach 33 GW this year, according to TrendForce data. Companies with a high proportion of U.S. export business will also usher in new growth points, such as JinkoSolar, which accounts for 16.3% of sales in North America, Trina Solar, which accounts for 10.54% of sales in the United States, and 16.07% of sales in the Americas of LONGi Green Energy.
The increase in the demand for photovoltaic installations will also drive the demand for inverters to grow. After the photovoltaic is installed, its power generation is direct current, and it is also direct current after energy storage. The direct current needs to be finally transferred to the grid, and an inverter is needed to realize it. In the first three quarters of 2021, the inverter leader Sungrow's business in the United States accounted for 25%.
In addition, according to Xinhua News Agency's Washington correspondent Xu Yuan and The Wall Street Journal, it has recently been reported that the United States' 301 tariffs on China (the tax items include photovoltaic products) may be cancelled. This is undoubtedly another good news for Chinese photovoltaic companies. It is foreseeable that the relationship between China and the United States in the photovoltaic industry will be much more harmonious in the near future. However, the United States is also expanding its local production capacity. After the two-year exemption period ends, the situation may be will be different.