US Launched Anti-Dumping and Countervailing Investigations on Four Southeast Asian Countries, Bifacial Module Exemption Cancelled, What is the Impact on PV Products? [SMM Analysis]

Following the US government's recent announcement to increase the 301 tariffs on Chinese PV products (from 25% to 50%), the US has shown its determination to heighten trade barriers and target the Chinese PV industry, issuing a series of new tariff policies on PV products over consecutive days. The launch of a new round of anti-dumping and countervailing duty investigations on Southeast Asian PV cells and modules, and the cancellation of the bifacial module tariff exemption was confirmed.

(1) Launch of a New Round of Anti-Dumping and Countervailing Duty Investigations on PV Cells and Modules from Four Southeast Asian Countries

On May 15, 2024, in response to an application submitted by the American Alliance for Solar Manufacturing Trade Committee on April 24, 2024, the US Department of Commerce announced the initiation of anti-dumping and countervailing duty investigations on crystalline silicon photovoltaic cells, whether or not assembled into modules, imported from Cambodia, Malaysia, Thailand, and Vietnam.

• Important Milestones: The US International Trade Commission (ITC) is expected to make a preliminary determination on industry injury by June 10, 2024, at the latest. If the ITC determines that the imports of the products in question cause or threaten to cause material injury to the US domestic industry, the US Department of Commerce (DOC) will continue its investigation and is expected to make a preliminary countervailing duty determination by July 18, 2024, and a preliminary anti-dumping determination by October 1, 2024. Final determinations on countervailing and anti-dumping duties are expected to be issued in Q4 2024. The ITC is expected to make a final countervailing duty determination in Q1 2025 and a final anti-dumping determination in Q2 2025.

• According to US statistics, in 2023, the value of imports of the investigated products from the involved countries was approximately: Cambodia ($2.3 billion), Malaysia ($1.9 billion), Thailand ($3.7 billion), and Vietnam ($4 billion). The dumping proportion were: Cambodia (126.07%), Malaysia (81.24%), Thailand (70.35%), and Vietnam (271.45%).

(2) Cancellation of the Bifacial Module Tariff Exemption under Section 201

On May 16, 2024, the White House announced new measures, declaring the immediate cancellation of the exemption for bifacial PV modules from safeguard tariffs under Section 201 of the Trade Act of 1974. For already signed bifacial solar module supply contracts that are delivered within 90 days after the exemption cancellation, these contracts can continue to enjoy the exemption within that period. The Biden administration stated that this move is to protect US domestic PV manufacturers, with the latest policy setting the Section 201 tariff rate at 14.25%.

Currently, the main types of tariffs imposed by the US on imported PV products are as follows:

1) 301 Tariffs: On PV cells and modules directly imported from China, with the rate increased from 25% to 50% from May 14.

2) 201 Tariffs: On non-US PV cells and modules, with a rate of 14.25% in 2024, decreasing by 0.25% annually, expiring on February 6, 2026. The policy retains a 90-day transition window.

3) Chinese Anti-Dumping/Countervailing Duties: On Chinese PV companies (including those identified as engaging in circumvention activities with Southeast Asian capacities), with varying rates for different companies. The latest anti-dumping/countervailing duty rates are 36.5%/8.47%.

4) Southeast Asian Anti-Dumping/Countervailing Duties: On Southeast Asian PV capacities, with a new round of investigations announced, and rates pending preliminary and final determinations. The main impact is expected to be anti-dumping rates, ranging from 70.36% to 271.28%. This round of investigations is independent of the previous anti-circumvention investigations (restarted on June 6), and even if there are silicon wafer and auxiliary material capacities in Southeast Asia, there is still a probability of being included in the tariff imposition. [Anti-circumvention exemption conditions: use of non-Chinese silicon wafers/meeting four out of six non-Chinese auxiliary materials]

SMM believes:

Currently, Chinese PV companies have established integrated capacities for silicon wafers, solar cells, and modules in Southeast Asia, and major auxiliary material companies such as glass and film have also set up production bases in Southeast Asia and other overseas locations. Therefore, meeting the anti-circumvention exemption conditions is relatively easy for Chinese PV products.

Considering that Chinese PV companies' exports to the US are still primarily from Southeast Asian production, the most direct impact on Chinese PV companies is the anti-dumping and countervailing duty rates on the four Southeast Asian countries, with the increased 301 tariffs having a smaller impact. Given the US's measures against the Chinese PV industry and its determination to support domestic capacity repatriation, it is expected that the imposition of anti-dumping and countervailing duties is highly likely. This round of Southeast Asian anti-dumping and countervailing duties is likely to significantly limit the export volume of Southeast Asian PV products to the US.

For Chinese PV companies' capacities in Southeast Asia, the export volume of modules produced in Southeast Asia to the US may shrink, and in H2, these modules may be redirected to other countries, primarily in the Middle East and Latin America. However, if the demand growth in these regions cannot compensate for the reduced US demand, the operating rate of Southeast Asian module production bases may see a significant decline in H2.

In fact, the US's tariff imposition on Southeast Asia has been anticipated by Chinese companies. In recent years, Chinese companies have gradually set up module bases in the US, with leading module companies such as LONGi, Jinko, JA Solar, and Trina starting to release production capacity in 2024. Other companies, including Runyang, Canadian Solar, and Seraphim, have also started production at their US bases. Stimulated by this round of Southeast Asian anti-dumping and countervailing duty investigations, it is expected that Chinese companies' existing capacities in the US will accelerate their ramp-up to consolidate their market share in the US PV product market. The advantages of US domestic PV cell and module capacities will become more prominent, benefiting Chinese PV companies in the US. However, the cost and construction cycle of overseas layouts are higher and longer compared to domestic ones, so the expansion of Chinese companies' capacities in the US will still take time.

The supply-demand structure of the US PV market may change again. The US Department of Energy and the US Department of Commerce stated that they will closely monitor import patterns to ensure that the US market does not become oversaturated. To promote US installation demand, the US Treasury Department has also issued subsidy details to enable more US developers and manufacturers to receive subsidies, increasing the willingness to manufacture PV products and develop projects.

However, the US's tariff increase measures will inevitably raise domestic module prices and increase the development and construction costs of US PV projects. Since early April, due to changes in US government policies, subsequent market pricing has risen by 3 to 4 cents. Considering the sharp drop in global module prices in 2023-2024, coupled with the recent policy changes, the impact on the enthusiasm for US project development and installation in 2024 is expected to be limited. SMM maintains its forecast of 40GW of new PV installations in the US in 2024. For future US installations, the growth rate of module supply will be the most direct factor affecting the installation growth rate.

It is expected that by the end of 2024, US domestic module capacity may reach nearly 60GW. Combined with the volume of imported modules (mainly from India), this could achieve a supply-demand balance. However, it is worth noting that although US module capacity is continuously expanding, the domestic PV cell capacity is the main bottleneck limiting production. By the end of 2024, US domestic PV cell capacity is expected to be less than 10GW, creating a significant gap between the supply and demand of cells and modules.

The supply of PV cells will significantly limit the actual operating rate of US module capacity, making it difficult for the US to quickly move away from imported PV cell supplies. The US imposes high tariffs on imported PV cells from China and Southeast Asia, but the PV cell capacity outside the four Southeast Asian countries is also limited. This risk will be passed on to US module manufacturing, affecting the progress and quantity of US module manufacturing. Therefore, to ensure the growth of US domestic module manufacturing, the US government may plan to increase the tariff quota for imported PV cells from 5GW to 7.5GW to expand the production scale of the entire PV industry chain. Currently, Chinese PV cell companies are also setting up capacities overseas, mainly in Indonesia and Laos, where exporting PV cells to the US is smoother, and they have the opportunity to become major suppliers.

In summary, the multiple tariff policies intensively issued by the US government this time aim to protect US domestic PV manufacturing and target the Chinese PV industry. The imposition of anti-dumping and countervailing duties will have a significant impact on the export of products from Chinese companies' Southeast Asian bases, potentially requiring a shift in export destinations to fill the gap. In the short term, the impact on the current downstream supply and demand in the US market is minimal, but in the future, the speed of US domestic PV cell capacity expansion, changes in PV cell import quotas, and potential changes in anti-dumping and countervailing duty policies on upstream segments will all become the major factors affecting the development of the US PV market.