The decision to ban products from four Chinese solar manufacturers based in the Xinjiang province taken today by the U.S. Biden Administration has already provoked reaction from both analysts and market players.
John Smirnow, general counsel and vice president of market strategy at the Solar Energy Industries Association (SEIA), issued a statement that said, “The news of enforcement action on solar products coming from the Xinjiang Uyghur Autonomous Region (XUAR) is not unexpected and we fully support the Biden Administration’s efforts to address any forced labor in the solar supply chain.
“The fact is, we do not have transparency into supply chains in the Xinjiang region, and there is too much risk in operating there. For that reason, in October, we began calling on solar companies to leave the region and we provided them a traceability protocol to help ensure there is not forced labor in the supply chain.
“SEIA will continue to work with the administration and our partners to stand against forced labor and build a clean energy future we can all be proud of.”
Philip Shen of Roth Capital Partners said in a note to clients that the move could have a “significant negative impact on the whole U.S. solar industry.” He said that Hoshine is an annual supplier of around 800,000 MT of MG-Si (magnesium silicide), a raw material needed for polysilicon production.
Shen said that PV module imports may now need to prove that there is no content from Hoshine in order to enter the U.S. “Access to solar modules in the U.S., in our view, could be severely limited by this order as we believe isolating and tracing MG-Si through the supply chain could present a significant challenge.”
Adding to pressure on the Biden administration, members of the U.S. House Ways and Means Committee sent a letter urging customs officials to “immediately take aggressive enforcement actions” regarding polysilicon products entering the United States from Xinjiang, China. The letter to acting U.S. Customs and Border Protection commissioner Troy Miller was dated June 10 and was signed by two dozen members of the congressional tax writing committee.
Zero tolerance
Reuters reported that Hoshine Silicon Industry said on an investor platform that it backed the Chinese foreign ministry’s reaction, adding that the firm does not export industrial silicon to the United States directly and that the impact on its business would be limited.
Xinjiang Daqo New Energy Co. sent the news agency an email saying the company has “zero tolerance” towards forced labor, and that it does not sell directly to U.S. companies, or buy from the United States, and there would not be “a significant impact on the company’s business.”
Last September under the Trump administration, U.S. Customs and Border Protection (CBP) issued five Withhold Release Orders (WRO) on products from the Xinjiang region. Products included hair products, apparel, cotton, and some computer parts.
Th Biden administration may have had no choice but to act on the ongoing allegations of forced labor in the solar supply chain, said Mark D. Herlach, a partner in the Washington, D.C. law firm Eversheds Sutherland. “No one wants to be in a position of not responding to forced labor,” he told pv magazine in an interview.
In a note to clients, the firm said that possible sanctions could have implications on purchasers of PV modules. These could include direct legal jeopardy, financing challenges, supply chain disruptions, and reputational risk. The note said that reputational concerns, for example, have led major brands such as Calvin Klein, Gap, H&M, IKEA, Patagonia, and Tommy Hilfiger to stop buying cotton sourced from Xinjiang.
