Suntech Power Holdings Co. Ltd. (NYSE:STP) Hopes for a Prolonged Surge Squashed

After slumping long and hard in late Q1 of this year, Suntech Power Holdings Co. Ltd. (NYSE:STP) seemed to be getting back on track in late May, with stock price clawing its way back above a dollar. The hopes for a continued run up the charts were cut short not only for STP but for all Chinese solar product manufacturers.

Just two days ago the European Commission implemented a measure to check the influx of cheap Chinese solar panels and accompanying products. The European Union imposed anti-dumping duties on the imports, with the rates clocked at 11.8% until August this year. Beyond that point the percentile duty will skyrocket up to 47.6%. That level, according to the European Commission, will be sufficient to undo the damage done to European economy by the cheap Chinese imports. The United States has also chosen to levy duties on the import of Chinese solar panels. The decision of the European Union was in part a response to the worldwide distribution of solar production that shifted from a majority stake for Germany several years ago, to a 50% stake for China in 2010.

The anti-dumping measure was immediately reflected in the price movement of not just STP, but other Chinese solar companies such as Trina Solar Limited (NYSE:TSL), who closed over 8% in the red yesterday. STP slumped 7% in the last session. STP also had one of its units declare bankruptcy in March – another event that helped the stock price along its way down the chart.

China formally criticized the anti-dumping measures and took some of its own, launching an anti-dumping probe into Euro wine imports. With the escalating tension, it’s hard to predict which way things will turn out, but it doesn’t look like the immediate future holds anything particularly good for STP.