SolarWorld under pressure to find resolution to Hemlock court case

It was the news that SolarWorld did not need, as the judge in the Hemlock vs SolarWorld contract dispute gave an initial ruling in favor of the U.S. polysilicon manufacturer. SolarWorld was immediately defiant in the face of the ruling, stating that it didn’t believe that the case could be enforced in Europe and that the company would appeal if the final ruling goes against them anyway, but Sharma believes that the damage has already been done.

“I think the damage has already been done due to the U.S. ruling, with bond holders, and anyone who is looking to provide finance to SolarWorld, regardless of whether the ruling has been done in Europe, it will make them very wary,” Ash Sharma IHS Senior Research Director told pv magazine. “It’s pretty damaging what’s happening with the case. They’ve got €300 million in bonds due, which is probably going to be accelerated. They’re going to struggle to get further loans or bonds elsewhere now, with this ruling against them, so they know they need to find a solution to this pretty soon.”

As was seen within the court documents that were released last week, the negotiations broke down after SolarWorld changed the wording of a letter that Hemlock wanted the company to send to the U.S. Department of Commerce. The letter was to show that SolarWorld was changing its position in the solar trade dispute between the U.S. and China, and to petition the Department of Commerce to find a resolution to the dispute.

SolarWorld has shown a great reluctance to change its position in relation to the solar trade cases involving the U.S. and China. Even if it was willing to change its position, there is no guarantee that it would impact the rulings of either country in relation to the case.

“I would say based on the indications from SolarWorld over the past couple of years, they seem very stubborn over the trade case and it doesn’t look like they want to negotiate at all, based on the rhetoric coming from the company,” Sharma commented. “The other thing to consider is that it’s really in the hands of the chamber of commerce at the moment.

“It’s not really up to SolarWorld to drop the charges now, what they could do is initiate a process not to extend it, but that could take some time. There could even be another western manufacturer that decides to pick up the case and try and proceed with the claim against the Chinese producers. It’s not done and dusted in any sense. It would take more than Hemlock and SolarWorld coming to an agreement on this.”

Hemlock is eager to have the U.S. duties on Chinese PV cells and modules removed in the hope that China would respond by removing the duties that it has placed on polysilicon that is manufactured within the U.S. Of course, this is another unknown, even if the U.S. Department of Commerce was to drop the case against Chinese manufacturers.

There is a G20 meeting coming up soon during which the trade cases are due to be discussed, so this ruling may have come at the right time for SolarWorld to have a bigger impact on the discussions.

“It [the court ruling] certainly could have an impact on the discussions, because I can see pressure being put on SolarWorld to negotiate on this now that the ruling has gone against them,” continued Sharma. “Probably the smart thing for them to do is negotiate quickly and try and come to a resolution fairly soon, because the longer this drags on the more damaging this will be for SolarWorld’s business.”