Europe's solar panel market shaken up by tariffs imposed on Chinese imports

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14 May 2013, Nuclear, Solar, Wind

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China has subsidized its solar panel manufacturers to the extent that they are able to sell their products in Europe for up to 45% below the actual cost of manufacturing. As a result the Chinese have captured 80% of the European market and forced prices so low that European manufacturers have been unable to make any profits. Punitive import tariffs on Chinese solar panels will be necessary to keep European manufacturers in business, but the result will be a rise in average solar panel prices.

The introduction in early March of compulsory registration for imported Chinese solar products has dissuaded many Chinese suppliers from clearing their products through EU customs, reducing supply. The extra administration costs and the almost inevitable introduction of punitive tariffs of between 30% and 50% on Chinese solar products will raise prices, providing an opportunity for European manufacturers to finally increase their prices to generate much needed profits.

Around 90% of Chinese solar production has been exported to the EU and to US markets, where import tariffs are already levied. Despite the fall in demand in these markets for Chinese solar products, rapidly emerging solar markets in China and Japan will provide a timely opportunity for Chinese manufacturers as European demand declines.

In Europe, the reduction in shipments from China will lead to a tighter market and higher prices. This poses a potential problem, as many governments have regarded the rapid price reductions of solar panels in the last few years as a standard trend and have set subsidies to be reduced at incremental stages on the assumption of ongoing price decreases. However, prices will rise, returns on solar panel investments will be reduced, and the rate of solar adoption will fall, endangering thousands of jobs if subsidies are not quickly rebalanced. / / @DatamonitorEN

Source: MarketLine

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