Crystalline Silicon Photovoltaic Cells and Modules from China Investigation Nos. 701-TA-481 and 731-TA-1190 (Preliminary) Publication 4295 December 2011 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS Deanna Tanner Okun, Chairman Irving A. Williamson, Vice Chairman Charlotte R. Lane Daniel R. Pearson Shara L. Aranoff Dean A. Pinkert Robert B. Koopman Acting Director of Operations Staff assigned Christopher Cassise, Senior Investigator Andrew David, Industry Analyst Nannette Christ, Economist Samantha Warrington, Economist Charles Yost, Accountant Gracemary Roth-Roffy, Attorney Lemuel Shields, Statistician Jim McClure, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Crystalline Silicon Photovoltaic Cells and Modules from China Investigation Nos. 701-TA-481 and 731-TA-1190 (Preliminary) Publication 4295 December 2011 C O N T E N T S Page Determinations.................................................................. 1 Views of the Commission ......................................................... 3 Separate Views of Commission Charlotte R. Lane ...................................... 31 Part I: Introduction ............................................................ I-1 Background .................................................................. I-1 Organization of report.......................................................... I-1 U.S. market summary.......................................................... I-2 Summary data and data sources .................................................. I-3 Previous and related investigations................................................ I-3 Nature and extent of alleged sales at LTFV ......................................... I-3 Nature of alleged countervailable subsidies ......................................... I-4 The subject product ............................................................ I-5 Commerce’s scope.......................................................... I-5 Scope issues at Commerce.................................................... I-6 Tariff treatment ............................................................ I-7 Physical characteristics and uses............................................... I-7 Production process .......................................................... I-13 Intermediate products .......................................................... I-17 CSPV cells vs. CSPV modules ................................................ I-17 Domestic like product issues .................................................... I-19 CSPV cells and modules vs. thin film solar products ............................... I-19 Part II: Conditions of competition in the U.S. market ................................ II-1 Market characteristics.......................................................... II-1 Channels of distribution........................................................ II-1 Market segments.............................................................. II-1 Geographic distribution ........................................................ II-3 Supply and demand considerations ................................................ II-5 U.S. supply ............................................................... II-5 U.S. demand .............................................................. II-9 Substitutability issues .......................................................... II-19 Comparison of U.S.-produced and imported product ............................... II-20 Part III: U.S. producers’ production, shipments, and employment ...................... III-1 U.S. producers ............................................................... III-1 U.S. producers of CSPV cells................................................. III-3 U.S. producers of CSPV modules .............................................. III-3 U.S. capacity, production, and capacity utilization ................................... III-3 U.S. producers’ U.S. shipments and export shipments ................................. III-4 U.S. producers’ imports and purchases of imports .................................... III-5 U.S. producers’ inventories ..................................................... III-5 U.S. employment, wages, and productivity ......................................... III-5 i C O N T E N T S Page Part IV: U.S. imports, apparent consumption, and market shares ...................... IV-1 U.S. importers................................................................ IV-1 U.S. imports ................................................................. IV-3 Negligibility ................................................................. IV-6 Apparent U.S. consumption and market shares ...................................... IV-6 Ratio of imports to U.S. production ............................................... IV-8 Part V: Pricing and related information ............................................ V-1 Factors affecting prices......................................................... V-1 Raw material costs.......................................................... V-1 U.S. inland transportation costs................................................ V-4 Pricing practices.............................................................. V-4 Price data ................................................................... V-6 Published price data ........................................................... V-11 Lost sales and lost revenues ..................................................... V-12 Part VI: Financial condition of U.S. producers ...................................... VI-1 Background .................................................................. VI-1 Operations on CSPV cells and modules ............................................ VI-1 Capital expenditures and research and development expenses ........................... VI-4 Assets and return on investment .................................................. VI-5 Capital and investment......................................................... VI-5 Part VII: Threat considerations .................................................. VII-1 The industry in China .......................................................... VII-2 U.S. importers’ inventories...................................................... VII-6 U.S. importers’ current orders ................................................... VII-7 Antidumping and countervailing duty orders in third-country markets .................... VII-7 Information on producers in nonsubject countries .................................... VII-7 ii C O N T E N T S Page Appendixes A. Federal Register notices....................................................... A-1 B. List of conference witnesses ................................................... B-1 C. Summary data............................................................... C-1 D. Nonsubject country price data .................................................. D-1 Note.--Information that would reveal confidential operations of individual concerns may not be published and therefore has been deleted from this report. Such deletions are indicated by asterisks. iii UNITED STATES INTERNATIONAL TRADE COMMISSION Investigation Nos. 701 TA-481 and 731-TA-1190 (Preliminary) CRYSTALLINE SILICON PHOTOVOLTAIC CELLS AND MODULES FROM CHINA DETERMINATIONS On the basis of the record1 developed in the subject investigations, the United States International Trade Commission (Commission) determines, pursuant to sections 703(a) and 733(a) of the Tariff Act of 1930 (19 U.S.C. '' 1671b(a) and 1673b(a)) (the Act), that there is a reasonable indication that an industry in the United States is materially injured by reason of imports from China of crystalline silicon photovoltaic cells and modules, provided for in subheading 8541.40.60 (statistical reporting numbers 8541.40.6020 and 8541.40.6030) of the Harmonized Tariff Schedule of the United States, that are alleged to be sold in the United States at less than fair value (LTFV) and subsidized by the Government of China. COMMENCEMENT OF FINAL PHASE INVESTIGATIONS Pursuant to section 207.18 of the Commission=s rules, the Commission also gives notice of the commencement of the final phase of its investigations. The Commission will issue a final phase notice of scheduling, which will be published in the Federal Register as provided in section 207.21 of the Commission=s rules, upon notice from the Department of Commerce (Commerce) of affirmative preliminary determinations in the investigations under sections 703(b) or 733(b) of the Act, or, if the preliminary determinations are negative, upon notice of affirmative final determinations in those investigations under sections 705(a) or 735(a) of the Act. Parties that filed entries of appearance in the preliminary phase of the investigations need not enter a separate appearance for the final phase of the investigations. Industrial users, and, if the merchandise under investigation is sold at the retail level, representative consumer organizations have the right to appear as parties in Commission antidumping and countervailing duty investigations. The Secretary will prepare a public service list containing the names and addresses of all persons, or their representatives, who are parties to the investigations. BACKGROUND On October 19, 2011, a petition was filed