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REC Silicon Might Shut Down US Polysilicon Manufacturing Facility Due to Trade Disputes

published: 2015-09-23 18:41

REC Silicon ASA (REC Silicon) might shut down its polysilicon manufacturing plant in Moses Lake, Washington U.S.A. if China continued the 57% duty on the polysilicon imports. Approximately 400 of the current 720 employees would be laid off as long as the solar trade disputes over China and U.S.A. remain unresolved.

"REC Silicon was brought into the solar trade war in retaliation for a dispute regarding imports of solar panels from China into the US.,” said Tore Torvund, REC Silicon's CEO. “Now there is a resolution deal on the table between the U.S. and China that would provide Chinese panel companies with valuable market access in the U.S. provided that at solution can be found also for US polysilicon. A global resolution of both the Chinese solar panels and U.S. polysilicon trade barriers provides enormous benefits for the whole of China's dynamic and rapidly growing PV industry.”

He added, “We do not understand why China has not yet seized this unique opportunity for a mutually beneficial solar trade resolution, which would give China substantial financial returns. Despite numerous negotiations, the polysilicon dispute is still unresolved.

Torvund said that it is perplexing that Chinese polysilicon makers, who claim to have highly competitive production costs and only have capacity to serve less than half of China's growing polysilicon demand, could jeopardize the global resolution of the entire U.S. and China solar trade war. It is particularly baffling when additional competitive polysilicon supply is needed in China if its leading PV industry is to expand to its full potential to meet the world's increasing demand for solar energy. 

“As we understand it, there will be no resolution on Chinese solar panels imported into the U.S. without a deal providing reasonable market access for U.S. polysilicon into China," claimed Torvund.

According to REC Silicon’s recent financial report, the company shipped 60%~70% of its polysilicon production capacity to China. The trade relationship between China and USA severely influences REC Silicon’s financial performance. REC Silicon’s FBR FBR polysilicon production process uses 90% less power to produce its polysilicon than the traditional Siemens process, which is currently still utilized across the majority of the polysilicon manufacturing industry.

Little progress has been made on resolving the part of the solar trade war that adversely impacts solar grade polysilicon manufactured in the U.S., despite an enormous amount of recent work by numerous parties, led by U.S. Trade Ambassador Froman. This despite the fact that the White House, Chinese solar industry associations including CCCME, and affected Chinese and U.S. PV companies have recently made significant progress towards a deal which would resolve the solar panel trade dispute between the U.S. and China. However without a solution also for polysilicon, there will be no resolution of the trade war.

REC Silicon has already established a joint venture for producing polysilicon in China to circumvent the 57% custom tariffs. EnergyTrend believes that this announcement doesn’t indicate an immediate move to suspend the production capacity in Moses Lake but represents an appeal for further negotiation over the solar trade disputes. It is expected to launch a review for the 2014 anti-dumping and countervailing duties ruling by the end of 2015 or early 2016, and REC Silicon might be looking forward to a compelling resolution for the disputes.

Given the fact that the spot prices of polysilicon in 2015 was not profitable enough, REC Silicon might wait and see if the quotations would be raised or dropped in 2016 for future decision. Yet REC Silicon has been reducing its production capacity gradually since the second quarter of 2015 due to the de facto solar trade barriers, while the layoff could be conducted step by step to meet the actual operation demand.

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