While much of the focus is on the timing issues of the Europe/China anti-dumping investigations, it is the scope of any such actions that remains the key uncertainty for the industry as a whole.
There was never going to be any doubt that a pre-registration requirement would cause a short-term panic in Europe. But even here, the situation is not so straightforward. It has also come at the same time lower tier Chinese module suppliers are either leaving the PV industry due to overcapacity (and their loss of market-share), or these same manufacturers are deciding that domestic end-market growth in China is a far safer proposition going forward than fighting for overseas business.
Therefore, with or without any EU trade action, there was always going to be a filtering of the non-Tier-1 Chinese supply to Europe during 2013. Also, the role of the wholesale or distribution channels is also changing, with direct sales almost certainly the modus operandi in the EU industry going forward. Therefore, stocking lower tier modules in warehouses in Europe is also largely an artefact of the PV industry of the past, not the future.
But it is still diverting from the fundamental issue relating to the EU case which is the scope of any potential tariffs. Is any final ruling going to impact on Chinese assembled c-Si modules only? Or will it include Chinese c-Si cells, or even worse for the industry, Chinese manufactured c-Si wafers. This is ultimately what could differentiate the EU/China case from the US/China case, aside from the PV market sizes in question also.
If the EU follows the US example, and places tariffs on c-Si modules that include c-Si cells made in China (similar to the US), then we end up in the work-around environment again. Or for Tier 1 suppliers with a longer term strategy, the numbers game is simply applied on a case-by-case basis to ensure large-scale projects business.
In fact, it is European module suppliers that could potentially be the hardest hit here. Especially European module suppliers that for years have been rebranding Chinese modules (regardless of what cells or wafers were inside these modules) or had been relying on Chinese c-Si cells to assemble in Europe and resell under the ‘Made in Europe’ banner. If the scope goes back to c-Si wafers made in China, then everyone globally suffers and European markets (precariously balanced from a system price and IRR basis) are at risk of being the hardest hit.
An oversupply of wafers then for other (non-European) markets could also have a negative effect on ASPs, giving the European case a somewhat peculiar ability to further cause end-market price declines. In fact, if the European anti-dumping case only results in 1 or 2 GW of local market softness over the next 12 months, then this is 1 or 2 GW of poly/wafers/cells/modules that is going to end up in inventory, and we all know what this means for ASPs. Other global markets cannot absorb any European softness and supply channels cannot react quick enough to regulate production.
Therefore, scope remains the key issue – not the timing. Pre-registration is a short-term nuisance within an industry that is already filtering out lower Tier suppliers from non-Chinese end-markets. Scope is a potentially crippling issue and should be the one that everyone is focussing on now as the industry as a whole needs years, not weeks or months, to reorganize itself simply to ensure that European PV demand stays competitive 4-5 years out when other global markets start challenging for end-market supremacy.
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