On May 24th local time, EU member states will vote on the European Commission's proposal to impose tariffs on Chinese photovoltaics. On June 6th, the preliminary ruling results will be officially announced. Before these two critical moments arrived, China had already made multiple efforts to seek a turning point. However, the price commitment plan proposed by the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products was rejected earlier. At present, the Ministry of Commerce has gone to Europe to conduct final negotiations on the case. Experts believe that no matter what plan is ultimately reached, it will have a limiting effect, and China's photovoltaic industry will inevitably be impacted.

EU rejects proposal from Chamber of Commerce for Mechanical and Electrical Industry

The voting time is getting closer and closer. After multiple communications and consultations between the Chinese government and the European Commission, both sides have agreed that the China Chamber of Commerce for Import and Export of Machinery and Electrical Products (referred to as the Chamber of Commerce) will represent the Chinese photovoltaic industry in negotiations with the European Commission on the issue of "price commitment" in this case.

It is understood that the specific content of the "price commitment" negotiation is: China promises to export photovoltaic products to Europe at a minimum price and set a specific time limit; China has promised to limit the export of components to Europe annually to a certain scale. In exchange, the EU will not take anti-dumping measures against Chinese photovoltaic products.

The New York Times reported that the negotiations involve not only the European Union, but also the US government. However, the Chamber of Commerce for Machinery and Electronics recently announced that the European side directly rejected the negotiation proposal put forward by the Chinese industry, and did not respond to the questions and explanations raised by the negotiation working group. According to industry insiders' analysis, there is no doubt that the preliminary ruling will be passed, unless Germany votes against it during the final ruling. Germany is the largest concentration of the photovoltaic industry in Europe, and SolarWorld, which initiated the double anti initiative, is a German company.

There is still a turning point before the preliminary ruling is released

The final game between China and Europe has not stopped yet. It has been reported that the Fair Trade Bureau of the Chinese Ministry of Commerce has gone to Europe to conduct final negotiations on the case. Industry insiders believe that if Chinese photovoltaic companies do not want to be subject to additional tariffs, they must make concessions. After preliminary communication, two alternative solutions have been proposed: one is to impose quantity restrictions on Chinese exports to the European Union, and the other is that Chinese photovoltaic companies must make a commitment to increase prices.

In addition to making concessions, the Chinese government has another bargaining chip for the EU's photovoltaic anti-dumping negotiations. Previously, at the regular press conference held by the Ministry of Commerce on May 16th, the spokesperson of the Ministry of Commerce, Shen Danyang, stated that China will announce the anti-dumping and countervailing tariffs on polycrystalline silicon from Europe, America, and South Korea in June.

Impact: It is inevitable that the photovoltaic industry will be impacted

Experts believe that both quantity restrictions and price commitments will have a restrictive effect on Chinese photovoltaic companies, and it is inevitable that the photovoltaic industry will be impacted.

Over the past five years, China's photovoltaic industry has consistently ranked first in the world in terms of production, occupying over half of the European market. Although the export value of China's solar photovoltaic products to Europe decreased by 45.1% year-on-year to 11.19 billion US dollars in 2012, this still accounted for nearly half of China's total export value of 23.3 billion US dollars of photovoltaic products. The EU's restrictions may become the last straw that overwhelms a large number of photovoltaic companies.

Analysts from Hongyuan Securities believe that the local production capacity in the European Union is about 3GW, while the demand is about 12GW. The insufficient production capacity allows companies with brand advantages to maintain exports to the European Union, and the main impact is on prices. The shipment of second tier enterprises will be greatly affected, and the photovoltaic industry may face a fierce reshuffle process.