Who are the Secret Gainers of
the EU-China Solar Trade War
US Companies – First Solar and Sunpower
I don’t think that European solar companies will gain too much from this solar war. Except for Renewable Energy, other companies are too small or too uncompetitive to take advantage of these anti dumping duties. The biggest gainers in my view will be the US solar panel companies Sunpower (SPWR) and First Solar (FSLR). Both these companies have enjoyed very strong rallies in the last 6 months based on their improved operating performance. These companies have a strong distribution network in Europe and have costs which are slightly more than the Chinese companies. They also have the size and scale to supply large amounts of solar panels to the European countries like Italy and Germany.
Taiwan is the second largest manufacture of solar cells after China. The country has a number of large solar cell manufacturers like Gintech, Motech and Neo Solar. These companies have managed to survive the brutal downturn by acting as OEM suppliers to larger Japanese and Chinese solar companies. They have superior technology and low costs. Taiwan also has a large solar wafer manufacturing sector which helps these companies to procure wafers at a low cost. Gintech and Motech have huge solar cell capacities and can help the Chinese solar companies circumvent European duties. These companies are already seeing their factories run at full utilization due to the solar boom in neighboring Japan. These companies will benefit even more with mainland solar panel companies outsourcing solar cell and even solar panel orders.
The solar industry is a dynamic and a complex industry with many moving parts. The solar trade wars taking place between major trading partners has further complicated the existing dynamics. While there will be losers from these trade spats, there will also be many winners. The winners will not always be obvious as can be seen in case with the European solar companies. Taiwanese companies are already benefiting from the US imposition of solar duties on Chinese solar panel imports. They will gain even more as the bigger European market imposes higher solar duties on China. US companies too should benefit as they have the scale and costs to take advantage of the Chinese retreat from the European market. I remain positive about Sunpower stock as I fell the company with its European roots can take the maximum advantage.