INTERPRETATION COENERGIA EFFECTS CUSTOMS DUTIES MODULES, CELL AND WAFER ORIGIN CHINA

This has been prepared for the purpose of giving greater clarity to the extent possible, on the publication took place on yesterday 03.05.13 European Union in the Official Gazette on the introduction of the traceability of imports from China of modules, cells or wafer of Chinese origin, with effect from 06/03/2013.


The Story (short)
INo follow-dumping investigation initiated by EUProsun (SolarWorld) The European Community has decided that by June 6, 2013 will take a decision on the possible introduction of duties on modules, cells, wafers of Chinese origin. EUProsun argued that the low prices of Chinese modules were the result of illegal subsidies by the Chinese government with actual sales below cost in order to eliminate progressively the European manufacturers of modules and cells, to achieve a monopoly on the market.

The European Union has established during the investigation that the material costs were higher Chinese sales prices of the same within the EU. Hence the decision to continue and deepen the investigation.

the Statement

The new official rules N.182/2013 (Annex) provides traceability of all modules, cells, wafers of Chinese origin imported into the EU from 06/03/2013. All shippers, employees to importing operations, will in the stage of placing goods into the EU market communicate copy custom declaration to the same EU to keep on record for subsequent verification. View the norm, all shippers have the right to ask for payment or surety bond issued by the importer subject to a value up to 70% of the CIF equivalent goods (or price of the goods) in order to protect themselves in case of application of customs duties in order retroactive up to 90 days prior to the final decision on the imposition of duties on photovoltaic materials of Chinese origin, a decision which will be taken June 6, 2013.


Application in the reality of legislation - impact on the stakeholders
From the practical point of view, all those who make customs operations with input of Chinese photovoltaic material within the European Union as of March 6, 2013, must issue to the shipper on first demand bank guarantee up to 70% of the value of the goods, valid guarantee all 6 June 2013 date when we will know for sure whether duties will be applied and in what amount.
This will make it impossible for any clearance of Chinese modules starting today, for 2 simple reasons:
1) Hardly a subject importer will have a capacity to afford such a financial guarantee to leave large sums of money for 3 months. By way of example, if an importer buys 3MW of photovoltaic modules to a CIF price of 0.50 € / W, must immediately pay € 1,500,000.00 and will have to issue surety in favor of the shipper of € 1,050,000.00.
2) Surely the key point of the matter is that no subject importer, will be prepared to take a risk of loss of capital in the face of a price indefinitely. Exemplifying the importer will purchase the 3MW to the CIF price of 0.50 € / W and will have to shell out € 1.5M € + cash surety of € 1.05 M, will in turn resell the product you purchased at a price of 0.55 € / W knowing that it could be applied retroactively in a customs duty up to 70% (we are good, in this example we will use a hypothetical duty of 30%!), thus realizing a future loss of 0.10 € / W (0,50 € / W duty + 30% 0.15 € / W = total purchase price € 0.65 / W - direct selling price of 0,55 € / W = net loss € 0.10 / W!!). Same goes for EPC or end users who purchase directly through import modules resulting in distortion of the business plan drawn up initially with the cost module to 0.50 € / W modules with consequent updating of the cost to the extent of 0.65 € / W.


Immediate effects on the market
Of course you will have instantaneous effects on the market as manufacturers have different fiscal warehouses located in various European ports (Rotterdam, Antwerp, Hamburg, La Spezia, etc..) With goods already cleared (WARNING!! NOT ALL GOODS HAVE ALREADY 'CLEARED THROUGH CUSTOMS that ... still be cleared through customs, although physically arrived before March 6, will be subject to possible duties!) and also distributors and EPC have within their warehouses goods already cleared and therefore not subject to any future duties.
In the coming days there will be surveys among the various manufacturers to understand how much merchandise GIA 'CLEARED THROUGH CUSTOMS is present across Europe to understand that "autonomy" is possible to have modules in the sale of the old Chinese market prices. Vien saying that if the goods will be poor you will have an immediate effect with the first increase in prices (estimate 5% -8%) of Chinese products already cleared. The first market will suffer a setback with a frantic search for Chinese modules at a price still acceptable (compared with European products). Starting next week will rain down requests from all over Europe for Chinese modules already cleared, ready for delivery.

Effects on the market in the short to medium (3 months)
Once the Chinese products already cleared on the European market, no manufacturer or importer will provide to further customs clearance of goods on the market, so the forms of Chinese origin will be increasingly difficult findable. Chinese manufacturers at this point will have 2 choices:
1)Not cleared through customs or do not get any more form China in Europe until June 6, 2013.
2) Find a "loophole" to try to continue in the sale of Chinese modules. This loophole could be directed toward a first direction in the search zone "enclaves" (Malta, Cyprus and Croatia) on which to get the forms by ship and then proceed by placing zones accession of Chinese modules; direction difficult to pursue,since all the zones in turn will have to issue customs declaration at customs clearance merchandise, communicating necessarily the origin of the goods to the customs of competence, and thus fall in the traceability of the Chinese material in order to retroactive duty imposition.
The second loophole, but applicable sub-judice to the market, would be a "risk-sharing" between the producer (who customs clearance) and client. Exemplifying a manufacturer could "bet" on the application of a certain percentage of customs duty on June 6 with retroactive effect for all the goods cleared for all on March 6. Quantifying not limited to this percentage in a 30% customs duty, the manufacturer may offer the customer the sharing of this risk, applying a mark-up on the sale price equal to half the estimated duty, or by applying a markup of 15%. In the event that the duty subsequently decided by the EU was less than 30% the manufacturer would have a gain (or loss reduction) and the client a loss (or lost profits), in the case where the duty was subsequently decided by the EU top 30% of the manufacturer and the customer would have a loss would have a gain.
Following this logic, and assuming a standard CIF purchase price of 0.50 € / W by the customer, the customer should consider how the actual purchase price of no more than € 0.50 / € 0.50 but rather W / W + 15% or € 0.575 / W. As will be obvious to all, this price would be quite similar to a price charged to European material and then invoglierebbe more and more customers to buy European material, by virtue of the very similar price and above all by virtue of the award of incentive confidential material to EU .

After this quick analysis, one can understand that approach tough times for modules in China, that the goods currently stored in various warehouses and already cleared slightly and we appreciate that customers will be directed increasingly on European products.The downside is that many systems (especially large) will be "frozen" until June 6, when we all know the actual amount of duty applied to the modules, cells and wafers of Chinese origin. Another situation will emphasize the progressive decreased palatability of modules "Made in Italy" as all the Italian manufacturers use cells from China at low cost and by tomorrow will be obliged to use cells or Taiwanese origin EU with costs on average higher by 0, 07 for € 0.09 / W compared to cells in China.