Asia solar manufacturers soar after US says no to tariff probe

Chinese solar manufacturers are surging after the U.S. rejected a request to investigate whether they were circumventing existing tariffs, a move that critics warned would drive up costs for clean power and escalate tensions with China.

Canadian Solar Inc., which produces panels in China, climbed as much as 16% Thursday, the most intraday in more than 19 months, and JinkoSolar Holding Co. gained 12% in New York. GCL-Poly Energy Holdings Ltd. rose 7.1% in Hong Kong.

The U.S. Commerce Department determined that Asian companies didn’t sell solar cells “at less than normal value,” according to a notice in the Federal Register Wednesday. An anonymous group of U.S. solar companies had asked the agency to initiate a probe to determine whether the Chinese manufacturers were avoiding import duties by making equipment in Malaysia, Vietnam and Thailand.

However, the agency left the door open to review its decision, if the U.S. manufacturers reveal their identity by Monday. In a separate letter, Commerce notified American Solar Manufacturers Against Chinese Circumvention that choosing not to reveal their identities “hampers interested parties from fully commenting on the request for circumvention inquiries.”

A spokeswoman for the U.S. group said it was reviewing the decision, and didn’t immediately respond Thursday to inquiries about whether it would provide members’ names. The group has said they wanted to remain anonymous to avoid potential retaliation from Chinese suppliers.

A probe could have led to duties on supplies from those South Asian countries that together accounted for more than 80% of photovoltaic products imported into the U.S. in the first half of this year. Higher costs would have potentially undercut President Joe Biden’s ambitious climate goals to fully green the country’s electric grids by 2035.

“If this investigation had been initiated, it would have meant long-term damaging consequences for our nation’s energy goals and the 230,000 Americans the solar industry currently employs,” the American Clean Power Association, a trade group, said in a statement.

The ruling is a victory for Asian solar manufacturers and U.S. developers that rely on their equipment. It’s a setback for U.S. solar-panel makers.

Shares of Chinese panel companies rose Thursday on exchanges in Asia before paring gains. Trina Solar Co. and GCL-Poly Energy Holdings Ltd. jumped more than 6%, while JA Solar Technology Co. and Longi Green Energy Technology Co. climbed more than 3%.

The China Photovoltaic Industry Association declined to comment, while Longi Green Energy Technology Co., the world’s top panel maker, and Jinko Solar didn’t immediately respond to requests for a comment.

The manufacturing of solar panels is a multi-step process that’s often done in separate factories in different provinces or even countries. Companies based in China have long dominated the industry. In 2012 the Obama administration imposed tariffs on panels made in China, asserting that Beijing-backed companies were selling below cost to grow market share. Chinese panel makers then opened plants in countries including Thailand, Malaysia and Vietnam to supply the U.S.

In August, American Solar Manufacturers Against Chinese Circumvention petitioned the Commerce Department to investigate, arguing that some companies circumvented U.S. duties against China by opening plants elsewhere in Asia to complete solar panels. Members of the group haven’t publicly revealed themselves.

Despite the Commerce Department decision, Chinese solar panel companies still face pressure from the U.S. over allegations of forced labor in Xinjiang. The Biden administration has blocked imports of some silica-based products—a major input material for photovoltaic panels—from China.

Beijing has routinely denied allegations of human-rights abuses in Xinjiang, and accused the U.S. of lying to undermine companies operating there. Nearly half the world’s supply of polysilicon is produced in Xinjiang. Any further detainments could drive up the cost of solar panels in the U.S.