China Solar Firms Halt Output in Southeast Asia on US Curbs

China Solar Firms Halt Output in Southeast Asia on US Curbs

In a significant shift within the solar industry, Chinese solar firms are halting production at their Southeast Asian factories. This move comes as increased US trade barriers create uncertainty for exports from the region, affecting major players in the market.

Chinese Solar Firms Respond to US Trade Barriers

Longi Green Energy Technology Co. has started to wind down activities at its Malaysian plant and ceased operations at its Vietnamese facility. This change, reported by Chinese trade publication Arfcg.com, reflects Longi’s response to plunging prices and shifting trade policies since the start of the year.

Similarly, Trina Solar Co. has shut down capacity in Thailand and Vietnam. While they cite annual maintenance as the reason, a company spokesperson acknowledged that US demand is influenced by the current policy environment, leading to short-term fluctuations. Trina Solar plans to adjust production according to industry and market conditions.

Overcapacity and Market Challenges

Chinese solar companies are grappling with reduced profits due to an oversupply in the market. A surge of new factories over the past year has overwhelmed demand, prompting US and European officials to argue that China is hindering their efforts to build domestic supply chains.

New US Tariffs Impacting Southeast Asian Production

The Biden administration has recently introduced stringent rules, strengthening tariffs on solar equipment. A two-year reprieve for certain solar imports from Cambodia, Malaysia, Thailand, and Vietnam is set to end soon, alongside the planned termination of an exemption on bifacial solar modules.

These four countries have been focal points in trade complaints, with allegations that Chinese manufacturers established operations there to bypass previous US tariffs on solar modules. In 2023, these nations accounted for more than 70% of US solar module imports, according to BloombergNEF data.

Uncertainty for Southeast Asian Manufacturers

US solar manufacturers are petitioning for additional duties of up to 271% on equipment imported from the four Southeast Asian countries. This proposal has led manufacturers in these regions to halt raw material purchases while awaiting further clarity.

The Road Ahead for the Solar Industry

The evolving trade policies and the resultant production halts signify a turbulent period for the solar industry. As Chinese companies reassess their strategies, the impact on global supply chains and market dynamics will be closely watched. For the US solar market, the focus may shift towards developing more robust domestic production capabilities to mitigate reliance on imports.

Conclusion

The halt in production by Chinese solar firms in Southeast Asia underscores the complex interplay between global trade policies and market dynamics. As the US enforces stricter tariffs, the solar industry must navigate these challenges, potentially leading to significant shifts in production and supply chains worldwide.