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September 16, 2012
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Hemlock Semiconductor is actively exploring new applications for high-purity solar and semiconductor chemicals and feedstock materials. Dow Corning Asks U.S. for Agreements with China on Trade
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A smoldering trade war between China and the U.S. is affecting employment at Dow Corning's Hemlock Semiconductor Group (HSC), one of its graphite suppliers Mersen-Bay City and other firms.
China is complaining that U.S. and South Korean companies are "dumping" polysilicon in pushback over solar energy taxes.
HSC, the world's biggest maker of polysilicon, has delayed plans to add additional phases at its Clarksville, Tennessee plant because of a lack of demand.
The company recently completed the first phase of a $1.2 billion polysilicon manufacturing facility capable of producing 10,000 tons of polysilicon a year. Hemlock's Michigan plant in Michigan can make 36,000 tons of the main raw material in solar cells.
Polysilicon has plunged to $33.03 from as much as $475 a kilogram in 2008 after Hemlock and its rivals Wacker Chemie AG (WCH) of Germany and OCI Co. of South Korea increased production to satisfy higher demand for solar energy, according to Bloomberg New Energy Finance data. Price declines for polysilicon gutted margins for panel makers and made the technology more competitive with fossil fuels.
Hemlock is jointly owned by Dow Corning Corp. of Midland, Michigan and the Japanese companies Shin-Etsu Handotai Co. Ltd. and Mitsubishi Materials Corp.
Robert D. Atkinson, in a report for the Information Technology and Innovation Foundation, wrote that China seeks absolute supremacy in every industrial field and is ruthless in price-cutting and theft of technology to achieve its aims.
As the dispute has escalated in recent months, the Obama administration announced plans to impose punitive duties of as much as 250 percent on U.S. imports of Chinese solar cells.
Dow Corning Corp. President Robert Hansen said the Chinese case "is part of a broader trade conflict extending far beyond the polysilicon and solar industries, as an escalating number of trade disputes have been initiated throughout the globe in the last 12 months," he said.
Hansen added: "I am disappointed that the United States and China have yet to negotiate a sustainable, mutually beneficial settlement to the global trade issues that have arisen in the solar industry.
"This review is part of a broader trade conflict extending far beyond the polysilicon and solar industries, as an escalating number of trade disputes have been initiated throughout the globe in the last 12 months. This issue is serious and could impact Hemlock Semiconductor's ability to sell material to China -- its largest market -- if the Chinese government assesses duties against U.S. manufactured polysilicon sold into China.
"This case proves that no country or industry wins when trade disputes escalate. In China, these actions threaten the Chinese solar industry's access to the critical technical collaboration and material supply companies like Hemlock Semiconductor currently provide Chinese solar cell and module producers. This could lead to higher costs and potentially less globally competitive solar products from China.
"In the United States, more than $1 billion of U.S. exports and potentially thousands of U.S. jobs across the solar value chain are at risk -- as is the steady growth of the U.S. solar industry."
Dow Corning and Hemlock Semiconductor will continue to work closely with government officials from the U.S. and China to express the need for trade policies that acknowledge the dynamics and opportunities of a new and emerging global industry, said Hansen. "Ultimately, I am optimistic that a reasonable and mutually acceptable resolution is within reach which will enable and foster growth and cooperation."
China's dispute with the U.S. over solar-energy taxes is expected to hit in November perhaps in an effort to affect the election pitting President Barack Obama and Mitt Romney.
Bloomberg News reported recently that China's Ministry of Commerce is expected to release preliminary findings on a complaint that U.S. manufacturers are dumping polysilicon.
Daqo New Energy Corp. (DQ) and Jiangsu Zhongneng Polysilicon Technology Development Co., two of four companies that brought the case, have prompted China to investigate whether exporters from the U.S. and South Korea sold solar-grade polysilicon below cost, a practice known as dumping.
The world's biggest supplier of solar panels also started a countervailing duty investigation into the commodity from the U.S., China's Ministry of Commerce said in two separate statements. The investigation will cover the 12 months beginning July 1, 2011.
The actions escalate a trade dispute between the world's biggest economies after the U.S. said in May it will impose duties on Chinese solar cells, which are devices made from polysilicon and assembled into panels that convert sunlight into electricity.
"It's negative" for foreign suppliers such as MEMC Electronic Materials Inc. and Hemlock Semiconductor Corp., which sell products to China, Keith Li, an analyst at CIMB Securities HK Ltd., said. "The investigation may have little impact on prices of polysilicon, which has suffered from a supply glut and weak demand."
The average spot price of polysilicon tumbled to a decade low of $21.92 a kilogram as of July 9, a 56 percent decline from a year ago, according to Bloomberg New Energy Finance.
"This review is part of a broader trade conflict extending far beyond polysilicon," said Hansen. "The issue is serious and could impact Hemlock Semiconductor's ability to sell material to China, its largest market."
China will examine a tax-exemption program for the "advanced-energy manufacturing industry" promoted by the U.S. federal government and 15 state-government sponsored programs in Michigan, Tennessee, Washington and Idaho, the ministry's statement on the countervailing duty investigation said.
"We'll show our financial condition, workforce details and the impact on income," said Kevin He, investor relations manager for Daqo. "We hope the government sets appropriate punishment tariffs to curb dumping and protect us from damages" from U.S. and South Korean imports.
The struggle between the world's biggest energy-consuming nations centers on state support for the solar industry, a business both Obama and Chinese Premier Wen Jiabao have said is a priority. Global investment in solar projects rose 61 percent to $137.8 billion last year.
Secretary of State Hillary Clinton, in Beijing for talks with Chinese officials, said recently that while the two nations don't "see eye to eye" on everything, "we are convinced that our two countries gain far more when we cooperate with one another than when we descend into unhealthy competition." Li and He both said they expect a preliminary decision on possible duties against U.S. companies as early as November. The administration of Obama, which has dueled with challenger Mitt Romney over Chinese trade policy, said the duties it plans are necessary to counter Chinese dumping, or selling below cost.
Overcapacity and slower demand from Europe following a cut in subsidies has resulted in lower earnings at global suppliers of solar panel makers. The average spot price of polysilicon has dropped about 26 percent this year to $20.33 a kilogram. Prices for silicon-based solar cells have lost about 18 percent to 42 U.S. cents a watt this year, Bloomberg New Energy Finance data shows.
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