China's investigation into the EU's solar-grade polysilicon double-reverse investigation

Some European companies may need to reconsider their exports of Chinese polysilicon. Recently, the Ministry of Commerce in China announced its final decision on the anti-dumping and countervailing investigations targeting solar-grade polysilicon imported from the EU. The countervailing duty rate is set at 1.2%, while the anti-dumping tax has two tiers. Wacker Chemie’s dumping margin stands at 14.3%, whereas other European firms face a 42% anti-dumping duty. However, since Wacker has reached a price commitment with China, it will be exempt from the anti-dumping duties. **Overseas polysilicon prices fell sharply** The "double investigation" started on September 17, 2012, initiated by four Chinese companies: Jiangsu Zhongneng Silicon Technology Development Co., Ltd., Jiangxi Saiwei LDK Photovoltaic Silicon Technology, Luoyang Zhongchi High-tech, and Daxin Energy. These firms filed an anti-dumping case against polysilicon imports from the EU. The products under investigation are polycrystalline silicon produced using chlorosilane as a raw material and manufactured via the modified Siemens or silane methods. These four companies accounted for 78.62% of similar products in China during the first half of 2012, up from 63.26% in 2008, giving them significant influence in the industry. Among the EU firms involved, the most notable is Germany’s Wacker Chemie, alongside others like the Schmid Group, Joint Solar Silicon, MEMC Electronic (Italy), SILFAB SpA, Estelux Srl (Italy), and Siliken Spain. Over the years, China's production capacity for photovoltaic wafers and modules has grown significantly, leading to increased imports of polysilicon from Europe. In 2008, the amount of polysilicon imported from these European companies was just 3,932 tons, but by the first half of 2012, that figure had risen to 9,179 tons. The market share of these imports in China increased from 9.66% in 2011 to 12% in 2012. According to customs data, the price of imported polysilicon dropped sharply—from 1,589.2 thousand yuan per ton in 2008 to 225,500 yuan per ton in the first half of 2012—showing a dramatic decline. At the same time, domestic polysilicon prices also fell, from 40.99 million yuan per ton in 2008 to 145,600 yuan per ton in 2012. This price drop severely impacted domestic producers. Despite growing sales volumes, many Chinese polysilicon companies saw declining cash flows, investment returns, and rising inventory levels. Some enterprises faced financial difficulties, leading to losses. In 2008, Chinese companies sold about 2,502 tons of polysilicon, which increased to 32,300 tons in the first half of 2012. However, despite a tenfold increase in sales volume, revenue slightly declined from 4.813 billion yuan to 4.697 billion yuan. In the first half of 2012, the industry recorded a pre-tax loss of 650 million yuan, with a negative investment yield of 1.49% and an operating rate of 60.28%. Net outflows reached 6.7624 billion yuan during this period. **German Wacker survives** Wacker Chemie, due to its price commitment with China, will not face anti-dumping or countervailing duties for the next two years. However, other European firms will be subject to a 42% anti-dumping duty. Industry insiders suggest that Wacker’s import volume is among the highest, so its pricing will likely determine the impact of European polysilicon on the domestic market. Although Wacker hasn’t disclosed its export price, the market expects it to be around $24/kg, close to the current domestic price of $22/kg. Thus, Wacker’s products still have strong demand in China. Zeng Duohong, an analyst at Orient Securities, believes the EU’s “double investigation” will eventually benefit Chinese polysilicon companies. With increasing demand in the photovoltaic sector, polysilicon prices are expected to stabilize, maintaining a balanced competitive landscape. Looking ahead, global PV demand is projected to reach around 49 GW in 2014, requiring approximately 270,000 to 294,000 tons of polysilicon, representing a 30% growth. Given the high capital requirements for polysilicon production—around 700–800 million yuan per 1,000 tons—new entrants are unlikely to flood the market. With prices hovering around $22/kg, many companies are still unprofitable, preventing a surge of new competitors. According to Orient Securities, as of the first half of 2013, 43 polysilicon companies were operational in China, but only six remained active. The rest had shut down, meaning 86% of companies had ceased production. However, as demand gradually increased in the second half of 2013, some manufacturers began boosting capacity utilization. Companies like TBEA, Grand New Energy, and GCL-Poly are now operating at near-full capacity.

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