* Prelim decision found lower Chinese subsidies than
* U.S. will issue first ruling on anti-dumping duties in May
* China trade ministry says duties hurt US, China interests
* Shares of China solar panel makers rally
* SolarWorld CEO confirms similar case prepared in EU
* Imports of solar cells, panels from China hit $2.8 bln in
By Doug Palmer and Matt Daily
WASHINGTON/NEW YORK, March 20 The United States
dealt a blow to U.S. solar panel manufacturers and boosted
shares in Chinese rivals when it imposed unexpectedly low duties
on imports from China, though the move still drew fire from
China industry representatives.
The action, made public late on Tuesday, adds to trade
tension between the world's two largest economies and threatens
cooperation in the burgeoning clean-energy sector, which both
say they want to promote.
Energy analysts had expected Chinese imports of solar panels
to be hit with preliminary duties of 20 percent to 30 percent,
but the rates announced on Tuesday ranged from just 2.90 percent
to 4.73 percent - although these could be raised in future.
"If the U.S. finally decides on the tariff, U.S. solar
energy costs will increase sharply and shrink the energy
market," the China Chamber of Commerce for Import and Export of
Machinery and Electronic Products said in a statement.
Tuesday's decision was the latest salvo from Washington in
its efforts to help the nascent U.S. clean energy industry
compete against China's fast-growing companies, the leading
suppliers to the global solar market.
"I welcome that the unfair trading practices of the Chinese
(companies) have been noticed," Frank Asbeck, Chief Executive of
SolarWorld told Reuters on Wednesday. His company's
U.S. arm had led the industry coalition seeking import relief.
Asbeck confirmed that a similar case was being prepared in
the European Union, but declined to give details.
Rapid expansion by Chinese companies has created a glut of
solar panels that drove prices down sharply last year, pushing
some weaker U.S. companies, including Solyndra, into bankruptcy.
President Barack Obama, running for re-election in November,
has promised to crack down on unfair Chinese trade practices and
last week challenged China's export restrictions on critical
"rare earth" industrial materials in a case filed with the
European Union and Japan at the World Trade Organization.
China's Trade Ministry defended Chinese solar panel makers
by saying they won their competitive advantage from continuous
cost-cutting and research into advanced production technology.
"U.S. restrictions on Chinese solar cell products damage the
interests of both China and the United States," the ministry
said in a statement on its website, adding that bilateral
cooperation in the new energy sector would be affected.
It urged the United States to "protect the stable and
harmonious development of Sino-U.S. trade relations".
GOOD FOR CHINA, BAD FOR EUROPE
Shares in SolarWorld and peer Q-Cells fell 2.2
percent and 5.9 percent, also burdened by news that German solar
company Solarhybrid had filed for insolvency late on
"The duties imposed yesterday are much lower than
SolarWorld's demands as well as analyst expectations. We see
this decision as negative for SolarWorld and the European
manufacturers," said LBBW analyst Erkan Aycicek.
Chinese solar firms rose, with GCL-Poly Energy as
much as 4.8 percent higher, and Solargiga Energy Holdings
up nearly 3 percent, beating a flat broader index
and tracking gains in Wall Street peers overnight.
"Punitive tariffs of less than 5 percent would be manageable
for Chinese solar makers given that their panels are sold 25 to
30 percent cheaper than U.S.-made panels," said Min Li, head of
alternative energy at research firm Yuanta Securities.
Chinese solar panel makers depend on exports for more than
90 percent of their earnings and the United States is their
second-largest market, after Europe.
The Coalition for American Solar Manufacturing, a U.S.
industry group that has complained massive Chinese subsidies
were driving them out of business, said it expected the U.S.
Commerce Department to uncover more subsidies and unfair pricing
practices as it continued a probe in the coming months.
It said this would result in higher final duties.
"Today's announcement affirms what U.S. manufacturers have
long known: Chinese manufacturers have received unfair and
WTO-illegal subsidies," said Steve Ostrenga, chief executive
officer of Helios Solar Works in Milwaukee, Wisconsin.
China accounts for 114 of the 283 anti-dumping and
countervailing duty orders the United States has on foreign
goods. The Obama administration has imposed more than 50
anti-dumping and countervailing duty orders since taking office
in January 2009, including about 40 against Chinese goods.
The United States imported $2.8 billion worth of solar cells
and panels from China in 2011, up sharply from about $1.2
billion just a year earlier, according to industry estimates.
CHINESE COMPANIES FEEL 'VINDICATED'
Chinese producers and U.S. companies opposed to the duties
said the preliminary decision on Tuesday belied charges that
China was flooding its solar sector with subsidies.
"We're pleased and in large part feel vindicated," Robert
Petrina, managing director of Yingli Green Energy's U.S.
Jigar Shah, president of a coalition of U.S. solar panel
sales and installation companies which were opposed to duties,
called the ruling an "initial victory for America's solar
industry and its 100,000 employees" because it would not
significantly raise prices for solar products and hurt demand.
The Commerce Department set a preliminary duty of 2.90
percent on SunTech Power Holdings, the world's biggest
producer of photovoltaic solar panels, and a preliminary duty of
4.73 percent on Trina Solar, another major Chinese
producer, industry officials said. All other Chinese solar panel
producers and exporters received a duty rate of 3.59 percent.
Importers will have to post bonds or cash deposits based on
these while the department continues its investigation.