No Major N-T Impact Expected on Solars Following WTO Statement on U.S. Antidumping Duties - Roth (SCTY) (JASO) (TSL) (YGE)

Roth Capital comments on a World Trade Organization (WTO) report issued on July 14th, which concluded that the U.S.'s decision to apply countervailing duties against the Chinese solar industry violated certain global trade rules and recommended that “the US bring its measures into conformity with its obligations under the Subsidies and Countervailing Measures (SCM) Agreement.”

Roth sees the U.S. appealing the decision within the next 4 to 5 months and the WTO will have 90 days to evaluate the appeal. Should the U.S. lose its appeal, it will be required to bring its measures into conformity over the next 6 to 15 months, resulting in a total timeframe of 1.5 to 2 years.

-- What do we expect to happen? Our checks indicate that the US will likely lose its appeal. Even if it loses, our initial expectation based on our discussions is that it appears the US may be able to find a way to demonstrate compliance with the SCM agreement AND maintain its original, high countervailing duty levels. Moreover, during the time it takes to appeal and implement the decision, the original CVD tariffs would remain in place.

-- Our conclusion. All in, we believe this process could last nearly two years, and the economic result may not be much different from where we stand today. Although solar stocks reacted modestly positively yesterday in reaction to the WTO announcement ... we do not expect any lift in stocks due to this decision to be durable.

-- What is the impact of this decision on the upcoming anti-dumping case? Our understanding is that this decision will not have an impact on the July 24 AD case against China and Taiwan.

On watch today include Canadian Solar Inc. (Nasdaq: CSIQ), JA Solar (Nasdaq: JASO), JinkoSolar (NYSE: JKS), SolarCity (Nasdaq: SCTY), ReneSola (NYSE: SOL), Trina Solar (NYSE: TSL), and Yingli Green Energy (NYSE: YGE).

You May Also Be Interested In

• AGNC Investment Corp (AGNC) PT Lowered to $10.25 at Jones Trading
• Quest Diagnostics (DGX) PT Raised to $145 at Evercore ISI
• Citi Downgrades UBS AG (UBSG:SW) (UBS) to Neutral