China Solar Firms Halt Output in Southeast Asia on US Curbs

(Bloomberg) -- Chinese solar firms are halting production at Southeast Asian factories as increased US trade barriers create uncertainty for exports from the region.

Longi Green Energy Technology Co. began gradually winding down activity at a plant in Malaysia this week after halting all five production lines at a facility in Vietnam the week before, Chinese trade publication Arfcg.com reported Tuesday, citing an unnamed source. 

A Longi spokesperson said the company had made “adjustments” to its production plans at several factories to combat plunging prices and trade policy changes since the beginning of the year. 

Trina Solar Co. confirmed a report by Sina Finance that it was shutting down capacity in Thailand and Vietnam, citing annual maintenance for the move. However, a company spokesperson added that “demand in the US is affected by the policy environment, and there will be some short-term fluctuations.” The company will adjust production based on industry and market conditions, the spokesperson said.

Chinese solar companies are trying to turn a corner even as profits evaporate due to a wave of new factories that have come online in the past year. Instead of capturing a growing market, the new supply has overwhelmed demand, prompting US and European officials to complain that China is stymieing their efforts to develop their own supply chains.

The Biden administration last month issued a suite of rules strengthening tariffs against solar equipment. A two-year reprieve for certain solar imports from Cambodia, Malaysia, Thailand and Vietnam will end Thursday, and the US also plans to swiftly end an exemption on two-sided, or bifacial, solar modules. 

The four countries have been targeted in trade complaints that Chinese manufacturers set up operations there to circumvent Obama-era import tariffs on solar modules. Together, they accounted for more than 70% of US module imports last year, BloombergNEF data show. 

A group of US solar manufacturers is also petitioning Washington to impose additional duties of as much as 271% on equipment imported from the four countries. The proposal caused manufacturers in the four nations to halt purchases of raw materials while they waited for more clarity, BloombergNEF said in a report last month.

(Updates with Trina Solar response in fourth paragraph.)

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