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The Photovoltaic Market Of China And EU Resume Free Trade
- Sep 07, 2018 -

The European Commission recently formally rejected the application of the European Association of Photovoltaic Manufacturers (EU ProSun) to launch a "sunset review" with the support of 28 EU countries. The Minimum Import Price (MIP) will be cancelled and free trade resumed after September 3.


In order to settle the trade dispute over China's export of photovoltaic products to Europe, the companies that signed the agreement need to sell solar products (including batteries and components) to Europe at prices above the minimum import price, and the annual sales volume must be limited to a certain quota.


Reuters reported that a maximum tariff of 64.9% would be paid if the price was lower than the limit price. In May 2015, at the request of EU ProSun, the European Union conducted an "anti-circumvention filing investigation" on crystalline silicon photovoltaic modules and key components originating in China. The MIP agreement, which was due to expire at the end of 2015, was therefore postponed. In March 2017, the European Commission issued a final ruling of "sunset review" and decided to postpone the MIP agreement for another 18 months until September this year.


It is learnt that the MIP price limit will be adjusted once every quarter. According to the person in charge of a well-known component manufacturer in China, by the second quarter of this year, the price of MIP for single crystal component was 0.37 euro/watt, that for polycrystal component was 0.32 euro/watt, that for single crystal battery was 0.22 euro/watt and that for polycrystal battery was 0.19 euro/watt.


In fact, since 2015, Tianhe Solar Energy, Jingao, Jingke, Suntech and other Chinese enterprises have announced their withdrawal from the MIP agreement. "Because the company has the corresponding factories in Malaysia and other countries, so we have two options, one is shipped from China, that will strictly comply with the MIP agreement; the other is shipped through the factories in Malaysia, so there is no need to be restricted." Shipping prices from Malaysia will be slightly lower than the MIP limit, and the company will more often choose this mode of delivery, said Zhang Hao, marketing director of Jingao Solar Holdings Ltd. "At present, almost all domestic first-line photovoltaic manufacturers have withdrawn from the MIP agreement, mostly through overseas factory supply."


"After withdrawing from the MIP agreement, our market share in Europe has been very high, in the Netherlands, Switzerland, Germany and the United Kingdom have a good shipment." In this regard, Zhang Hao believes that Europe, as a high-end global PV market, attaches great importance to the brand value of products, coupled with the European PV market rooftop power plants, "price feedback is not as obvious as large ground power stations."


Although the price sensitivity is relatively low, but for this termination of the MIP agreement, there are also component manufacturers worried. "For big factories, there are worries. After the liberalization of the European market, there may be a mixed situation in a short time. " In response, Cao Junru, an analyst at Jibang New Energy Research Center, pointed out that once the European market opened up, in the current situation of excess capacity, more products will inevitably flow to Europe. "The European market will become hot and may continue to drive down component prices, but it will still depend on the supply-demand relationship and how much profit the supply chain can squeeze out."


According to Cao Junru's analysis, the European market will gradually warm up, Germany, France, the Netherlands may become the main growth point of demand, Spain, Greece, Poland and other countries will also increase demand. "Demand across Europe is expected to grow from nearly 9 GW last year to more than 11 GW, and demand in the second half will be stronger than in the first half. In terms of price, competition between general polycrystals and high efficiency single crystals will be fierce. "


As for the possible fluctuation of price, Zhang Hao also said: "the price must follow suit. After the termination of MIP, it would be unrealistic for Jingao to sell 0.4 euros per watt if everyone sold their components to 0.3 euros per watt. But the European PV market is not easily entered by the price tag, it needs to consider all aspects. For example, the recognition of distributors is a very important link. In the European market, distribution is a very important model, equivalent to the domestic brand agent, the distributor selected a brand will not be easy to replace. In this regard, Cao Junru also said that in Europe has brand trust in the front-line manufacturers if there is enough bargaining power, there is a chance to "talk about good prices in Europe orders."


As of press release, details of the termination of the MIP agreement have not yet been released. According to insiders, the relevant announcement has entered the internal schedule of the European Commission and will be officially announced in early September.