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Suit Filed by Hemlock Sends SolarWorld into Legal Predicament, PV Trade Disputes between China and US may Stay in Stalemate

published: 2016-07-22 18:18

Hemlock Semiconductor, U.S. polysilicon manufacturer, has sued SolarWorld of Germany for contract violation, demanding US$770 million of compensation. The move may send the latter into a legal predicament, as it is likely to lose in the litigation or have to withdraw its anti-dumping and countervailing charges against China- and Taiwan-made solar products which it filed with the U.S. Department of Commerce. The development, however, may not extract the case from legal quagmire, due to involvement of competing interests.

SolarWorld filed anti-dumping and countervailing charges with the U.S. in 2012, the EU in 2013, and the U.S. again in 2014, against China-made solar panels, alleging that dumping of such subsidized products has jeopardized the interests of U.S. and European firms. The charge in the U.S. in 2014 further implicated Taiwanese manufacturers. Subsequently, the U.S. Department of Commerce and the European Commission initiated investigation on the case and both finally impose punitive tariffs on China and Taiwan PV imports.

China retaliated, imposing high tariff on import of polysilicon from the U.S. and Europe, blocking import from foreign suppliers, such as Hemlock and REC Silicon, except Wacker Chemie, thanks to its price and volume agreement with China.

Hemlock tries to “trade” polysilicon with modules

In March 2013, Hemlock sued Deutsche Solar, a wafer subsidiary of SolarWorld, for defaulting on four "Take or Pay" contracts for failing to take delivery of the product, to the tune of over 20 million kilos in total. The U.S. court rendered an initial ruling in July 2016, requiring SolarWorld to pay US$770 million of compensation, which could bankrupt the company.

PV Magazine analyzes that Hemlock has sued SolarWorld, as a tactic forcing the latter to withdraw its anti-dumping and anti-subsidy charge against China-made solar panels and then having China lift the tariff barrier against U.S. and European polysilicon.

Hemlock has expressed willingness to renegotiate with Deutsche Solar over the "take or pay" contracts, should SolarWorld withdraw its anti-dumping and countervailing charge against China PV imports with the U.S. Department of Commerce.

PV Tech reports, citing SolarWorld, that SolarWorld will appeal the case, should the recent ruling be upheld in final verdict. In addition, Hemlock cannot enforce the ruling in Germany, except resorting to legal means, due to Europe's anti-trust law, according to SolarWorld.

Should SolarWorld withdraw its charge, expressing its loss of interest in the anti-dumping and countervailing duties, the U.S. Department of Commerce or the USITC could revoke the duties against China- and Taiwan-made PV products, after a review on changed circumstance, since it is the only plaintiff in the case. The review can be started upon the request of SolarWorld or Chinese firms subject to the duties, explained Taiwan’s Bureau of Foreign Trade as an answer to TPVIA’s quest.

The final reviews of 2012 charge and 2014 charge are scheduled in November 2017 and January 2020, respectively.

SolarWorld’s withdraw may be not helpful for the trade dispute

However, even if the duties are revoked in the U.S., China may not necessarily lift its tariff barrier against imported polysilicon. "Chinese polysilicon firms don't like too much import of polysilicon into the Chinese market," points out an analyst at EnergryTrend.

Lifting of the barrier could lead to oversupply and drive down prices, breaking existing balance between supply and demand, in the wake of the recent expansion of Chinese polysilicon firms.

Hemlock may emulate Wacher Chemie, seeking a price and volume agreement with China. However, before securing a clear-cut pledge from China, it will not forego its demand of US$770 million compensation from SolarWorld.

It is rather unlikely that Hemlock will drop its suit against SolarWorld, since it is uncertain if the withdrawal of anti-dumping and countervailing charge by SolarWorld will lead to liberalization of polysilicon trade by China.

EnergryTrend believes that stalemate for the case will continue in the short term, before related parties take new move after the U.S. authority has concluded the review of the anti-dumping and countervailing duties.

(Written by Rhea Tsao, Chief Editor of EnergyTrend. Translated by a contracted translator of TrendForce Corp.)

(Photo: a spanshop of Hemlock's introduction video)

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