The new Chinese tariffs will inflict particularly severe damage on companies such as REC Silicon, which has a state-of-the-art plant in Moses Lake, Wash., that employs more than 500 people and exports 80 percent of its polysilicon to China. It also has a plant in Butte, Mont., that employs 300 people and exports almost half of its product to China.
REC’s general counsel, Francine Sullivan, met with Sen. Jon Tester (D-Mont.) and aides to three other senators Tuesday and will meet with Obama administration officials Wednesday in an effort to speed a resolution to the widening trade dispute.
“Because of the highly political nature of these tariffs, we need a government-to-government solution,” Sullivan said in an interview. She added that Chinese customers were already cancelling orders.
Andrea Mead, a spokeswoman for the Office of the U.S. Trade Representative, said the department was “disappointed at China’s announcement of duties to be imposed on U.S. exports of polysilicon.” She said that “this step did not move the ball forward, but we will continue to engage.”
The polysilicon market is dominated by a half-dozen large firms, including Germany’s Wacker, South Korea’s OCI, China’s GCL and U.S.-based Hemlock Semiconductor Group, a joint venture of Dow Corning, Shin-Etsu Handotai and Mitsubishi Materials.
In 2012, U.S. production climbed to 24 percent of the global market, according to Sullivan. REC alone supplied 9 percent of the global market. She said that in the first half of this year, REC exports filled about 20 percent of Chinese industry’s polysilicon needs.
Prices for polysilicon have gyrated over the past decade, hitting a high of $475 a kilogram in 2008 before slumping to a low of $15.83 in 2012 as companies added too much capacity while slashing production costs.
Sullivan said that REC Silicon, which had spent about $2 billion to install highly energy-efficient manufacturing equipment, was operating at full capacity while others shut down production.
Now, however, the new tariffs will boost the market share of the other major manufacturers, the U.S. firms say. Shares of Daqo New Energy, a Chinese polysilicon maker, jumped 7.5 percent on Tuesday.
U.S. manufacturers of solar industry equipment, such as New Hampshire-based GT Advanced Technologies, are also closely tracking the trade battle.
“Fortunately for GT, our largest polysilicon customer, Korea-based OCI, will have to pay only a very small 2.4 percent tariff on their polysilicon exported to China,” said Jeff Nestel-Patt, spokesman for GT Advanced Technologies. “Though it is too early to tell, reduced levels of imported polysilicon from U.S. suppliers as a result of the tariffs could benefit producers from other countries such as OCI in Korea, who have the capacity to supply high-quality material.”