US set to give final decision on Chinese solar panel duties

* Tariffs have not slowed dramatic decline in solar panelprices

* US Commerce decision unlikely to stray far frompreliminary ruling

* Solar panel makers have also filed action in Europeagainst Chinese manufacturers

By Doug Palmer and Nichola Groom

WASHINGTON/LOS ANGELES, Oct 8 (Reuters) - The U.S. CommerceDepartment on Wednesday will announce final duties on billionsof dollars of solar panels from China in a high-profile casethat has raised fears of further damage to an already fragileindustry.

The department set combined preliminary duties of roughly 35percent earlier this year on most Chinese solar panels to offsetwhat it said were unfair prices and government subsidies.

The case was brought by a group of U.S. producers led bySolarWorld Americas , whose German parent has alsofiled action in Europe against Chinese solar panel imports.

So far, the tariffs have not slowed a dramatic decline inprices for solar panels. Globally, prices are down 30 percentthis year alone due to a massive glut of panels. The rapidexpansion of solar panel manufacturing in China in recent yearsis largely to blame for the massive oversupply, which has erasedprofits for makers of solar products and sent share prices inthe industry into a tailspin.

One analyst said he does not expect Wednesday's ruling to bea game-changer for Chinese panel manufacturers or theirinvestors.

"The market will be surprised if the Commerce Departmentchanges significantly from its preliminary ruling," saidBrigantine Advisors solar analyst Ramesh Misra.

"Does it have much of an impact on the Chinese companies atthis point? Most of them are already in mitigation mode tryingto figure out ways around it."

China has warned that the U.S. and European Union cases bothcould damage trade ties and cripple healthy development of theglobal solar and clean energy sector.

It has already struck back by launching an investigationinto imports of solar-grade polysilicon from both the UnitedStates and South Korea.

The Commerce Department on Wednesday will either raise orlower its separate anti-dumping and countervailing dutycalculations on the Chinese panels, based on any new informationit has found in its investigation.

It will also revisit a decision to exclude panels made fromnon-Chinese solar cells from the duties. A number of U.S.lawmakers have criticized that ruling, saying it would simplyencourage Chinese manufacturers to move solar cell productionoutside China to circumvent U.S. duties on panels. Solar cellsare assembled to make solar panels.

The last stage of the case will come in early November, whena separate agency, the U.S. International Trade Commission, willvote on whether to approve the duties or not.

Last year, the panel allowed the case to go forward byvoting 6-0 that there was reasonable indication that U.S.producers had been materially harmed by the imports.

For duties to be denied, four commissioners would have tovote in November that U.S. producers have not been materiallyharmed or threatened by the Chinese-made solar products.

In the first round, Suntech Power Holdings , TrinaSolar and 59 other Chinese solar companies were hit withpreliminary anti-dumping duties of slightly more than 31percent. "All other" Chinese solar companies got a preliminaryanti-dumping duty of about 250 percent.

Suntech and Trina also received preliminary countervailingduties of 2.90 percent and 4.73 percent, respectively. All otherChinese solar companies were also hit with a preliminarycountervailing duty rate of 3.61 percent.

SolarWorld Americas President Gordon Brinser said last weekthe preliminary duties were too low, while both Chinesemanufacturers and U.S. companies that install solar panels arguethey will hurt the sector by raising costs.

On the bright side, the tariffs could force some Chineseproduction capacity to shut down.

"That might drive consolidation in the Chinese market andthat would be a huge net positive," Brigantine's Misra said.

(Reporting by Doug Palmer and Nichola Groom; Editing byPatricia Kranz, Gary Hill)

((doug.palmer@thomsonreuters.com)(202 898 8341))