Suntech Power Holdings Co Ltdand Trina Solar Ltd reported significant first quarter losses. The two leading Chinese solar panel manufacturers’gross profit and gross margin have been affected by a provision for preliminary U.S. countervailing and anti-dumping duties. The ongoing US-China trade case was created after earlier this month the United States hit the Chinese solar industry with punitive import tariffs of 31 percent on solar panel imports fromChina.
Suntech Power, the world’s biggest manufacturer of solar panels, reported a loss of 74 cents per American Depositary share (ADS). Trina, the fourth-largest solar panel maker, reported a 42-cent ADS loss, trailing forecasts of 27 cents. Trina reported a net loss of $29.8 million for the first quarter of the year, while Suntech’s loss widened to $133 million. Suntech’s operating margin worsened to minus 29.1 percent from minus 10.2 percent. On a more positive note, Trina’s margin improved to minus 11.4 percent, compared with minus 14.4 the previous quarter,the company announcedlast week.
!m(/uploads/story/89/thumbs/pic1_inline.png)The disappointing performance of the Chinese solar firms comes after earlier this month the U.S. Commerce Department set punitive tariffs which apply to most top Chinese exporters, including Suntech Power and Trina Solar. Under the U.S administration’s proposal 61 Chinese companies, including Suntech Power, Trina Solar, Yingli Green Energy, LDK Solar, Canadian Solar, Hanwha Solar One, JA Solar Holding and Jinko Solar, will be subjected to anti-dumping tariffs of 31 percent. Others, however, will be subjected to a duty of 250 per cent, although those levels could be altered before the final ruling is issued from the Commerce Department in the coming months. And while a final decision is still to be reached,the Chinese photovoltaic module manufacturers had to make provisions for the potential duties. Suntech’s provisions were $19.2 million and Trina’s $26.2 million.
The U.S. ruling stems from a complaint filed last October by the U.S. subsidiary of Germany’s SolarWorld AG(SRWRF:US), and six other U.S. companies that alleged unfair competition, claiming that Chinese solar firms are improperly flooding the U.S. market with government-subsidised products. In recent years China’s solar power companies, which hold more than 60 percent of the global market, have largely relied on subsidised markets in Europe and the United States for the purchases of their products, promptingthe criticism that huge loans from Chinese state-run banks and low-ball pricing gave the Chinese companies an unfair advantage.
In response to the U.S. trade case ruling, China’s major solar industry players which have been affected by the recent trading situationlaunched the Solar Energy Promotion Alliance. The founding members are the four leading Chinese module suppliers: Suntech Power, Trina Solar,Canadian Solar, and Yingli Green Energy. The Alliance aims to tackle the anti-dumping probe and to establish “harmonious, free and equal industry order without trade barriers and disputes”. Considering the current trading situation, the Alliance is likely to result in a permanent institution representing the interests of Chinese photovoltaic suppliers.