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JinkoSolar expects spike in US orders as trade case hangs over industry

A trade case that could significantly increase the cost of imported solar equipment in the U.S. is expected to drive a rush in orders, potentially nudging up sales prices that tumbled as supply outstripped demand in the global market, according to executives at China-based solar manufacturer JinkoSolar Holding Co. Ltd.

The U.S. International Trade Commission took up the case in May after Georgia-based solar manufacturer Suniva Inc. requested tariffs and price controls to counteract what the company said are the harmful effects of imports on the domestic solar manufacturing sector. Critics say the case could threaten the broader U.S. solar industry and its 260,000 jobs by erasing years of cost reductions and making the technology less competitive against other sources of energy.

At the very least, the case "distracted the U.S. market and created uncertainties," Gener Miao, vice president of global sales and marketing at JinkoSolar, said June 5 on an earnings conference call. "From the market perspective, we will see a very strong rush in demand from [the] U.S. market due to the uncertainty brought by this Suniva ... petition and we are expecting ... even stronger demand later," he said. "As a result of relatively limited supply, [average selling prices] have stabilized and are increasing modestly."

The trade commission gave itself until Sept. 22 to rule on Suniva's injury claim, saying the case is "extraordinarily complicated."

Suniva submitted the petition shortly after filing for bankruptcy. The company, along with its co-petitioner, SolarWorld Americas Inc., asked Washington to set tariffs and minimum prices for imported solar cells and modules made from crystalline silicon, arguing that manufacturers in China and Taiwan have circumvented existing duties by moving operations to other countries. The U.S. Department of Commerce set the tariffs after finding that manufacturers, aided by state subsidies, sold equipment in the U.S. at below fair-market costs. Suniva filed its petition under Section 201 of the Trade Act of 1974, which does not require a finding of unfair trade practices.

While solar has been a booming business for project developers, lawyers and financiers, domestic manufacturers have seen their share of the U.S. market cut nearly in half since 2012, topping out at 11% last year, according to a World Trade Organization filing that cited statistics from Suniva. Last year, about 15% of the country's approximately 260,000 solar industry jobs were in manufacturing, according to The Solar Foundation, a nonprofit industry advocate. More than half of the jobs were on the installation side of the business.

Suniva's opponents say foreign manufacturers have faced the same headwinds that have been a drag on U.S. companies. JinkoSolar, which sent 13% of its shipments to North America during the first quarter, recently said the average selling price of its solar modules fell by 7% in 2016, "primarily due to over-supply of solar power products in the market." Nevertheless, revenues increased by 38% last year as higher module shipments offset the decline in sales prices. During the first quarter, module shipments were up 29% year over year at 2,068 MW as the average selling price fell by about 4% to 39.5 cents per watt.

"We believe Suniva's petition is baseless," JinkoSolar CEO Kangping Chen said. "While the petition may stimulate some rush [in] demand and win orders in the short term, we remain steadfastly opposed [to] it."

Depending on the outcome of the trade case, JinkoSolar may consider opening a factory in the U.S., Miao said.