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REC Solar: reflected glory

Sometimes the light at the end of the tunnel is sunshine; sometimes, an oncoming train. In July the US Department of Commerce announced that it would penalise solar-panel makers from Taiwan and China for dumping in the US market. These tariffs should slow the painful slide of solar panel prices, which have been cut in half since 2011. Some makers will suffer, others thrive.

The US applied tariffs before in 2012. But Chinese makers used a loophole in that trade decision to sell to the US using Taiwanese manufacturers instead. Thus Chinese overcapacity continued to pressure prices. Then China retaliated last year with tariffs against US solar grade silicon manufacturers. Companies caught in the middle would lose out: panel makers from Taiwan and China selling to the US (such as Yingli Green Energy) and US silicon producers depending on Chinese solar panel clients. The winners, however: panel makers outside China and Taiwan.

One of these is REC Solar of Norway, which produces panels in Singapore. After a few dark years - during which it split off material production operations as REC Silicon - its future looks brighter. It can expand into the US, the third-largest market, as panel installers there look for new suppliers. This year REC Solar has already signed up three new US clients, including SolarCity. And REC Solar says more contracts will come soon. REC Silicon, on the other hand, could suffer over time. It produces solar silicon in the US for Chinese clients.

The proportion of REC Solar's shipments bound for the US could double from 7 per cent, in a market in which the company expects demand to grow 27 per cent annually during 2013-16.

The clear risk is an end to trade war. Reflecting this anxiety, REC Solar's shares have hardly budged this year, trailing the Norway's OBX index by a few points. But a truce will take time to reach. Meanwhile, REC's US order book swells, US solar panel prices are likely to stabilise - and REC Solar is re-energising its business.

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