Abstract Some Chinese solar manufacturers are seeking to end long-term polysilicon supply agreements with foreign suppliers. They argue that if punitive tariffs range from 20% to 60%, Chinese solar PV companies would find it both unwilling and financially impossible to bear such tax burdens, even at the lowest rate. This has led to growing pressure on overseas suppliers to renegotiate terms or face potential contract termination.
SMM News reports that several Chinese solar firms are actively looking to terminate their long-term polysilicon contracts with international partners. According to these companies, when the contracts were originally signed, there was a significant shortage of raw materials in the market, which gave suppliers a strong negotiating advantage. As a result, many of these agreements now appear one-sided in favor of the foreign suppliers.
With the Chinese government expected to announce preliminary findings on countervailing and anti-dumping duties on polysilicon imports from Europe, the U.S., and South Korea in early 2013, Chinese solar companies are increasingly considering ending their long-term supply arrangements. This signals a high likelihood that punitive tariffs will be imposed, further complicating the financial landscape for domestic manufacturers.
Chinese solar manufacturers emphasize that if the final tariff rates fall within the 20% to 60% range, they would not only be unwilling but also unable to comply with the increased costs. Therefore, they are pushing overseas suppliers to make concessions or risk losing key business.
Should Chinese companies successfully terminate their contracts and shift to local material suppliers, domestic polysilicon prices and demand could surge dramatically. Some overseas suppliers have pointed out that certain contracts may include clauses stating that “if the tax rate changes, the cost is absorbed by the supplier,†which could actually benefit Chinese firms in the long run.
Currently, the spot price of polysilicon stands at approximately $17–$18 per kilogram, while the price in most long-term contracts is around $40–$50 per kilogram. If the final tariff rate reaches 30%, the financial incentive for Chinese companies to break their contracts becomes very strong, potentially triggering a major shift in the global polysilicon supply chain.
This situation highlights the growing tension between Chinese solar manufacturers and their international suppliers, as well as the broader implications for the global solar industry amid rising trade barriers and shifting market dynamics.
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