The U.S. Administration banned imports of material for solar panels from a Chinese company this week as America seeks to eradicate forced labor from its supply chain. The Biden Administration says that the import ban on silica-based products from a company in China's Xinjiang region will not impact the booming U.S. solar industry. But some analysts are not so sure and think there would be negative effects on the American solar panel manufacturing supply chain.
The United States is prohibiting imports of silica-based products made by Hoshine Silicon Industry Co., Ltd., a company located in Xinjiang, and its subsidiaries. The ban is based on information reasonably indicating that Hoshine used forced labor to manufacture silica-based products, the White House said on Thursday.
The ban includes products made outside the United States that use Hoshine materials, including solar panels manufactured with polysilicon from Hoshine.
China's "use of forced labor in Xinjiang is an integral part of its systematic abuses against the Uyghur population and other ethnic and religious minority groups, and addressing these abuses will remain a high priority for the Biden-Harris administration," the White House said.
China slammed the ban and accused the U.S. of trying to cripple Xinjiang's industry.
"China strongly condemns the sanctions that the US imposes on Chinese companies based on lies and disinformation," Foreign Ministry Spokesperson Zhao Lijian said at a regular press conference on Thursday.
"From cotton to PV, from agriculture to industry, the US side uses human rights as a disguise to do all it could to cripple the industrial development in Xinjiang," he added.
The U.S. ban will not derail the Administration's clean energy targets, according to Homeland Security Secretary Alejandro Mayorkas.
"Our environmental goals will not be achieved on the backs of human beings in a forced labor environment," Mayorkas said at a press briefing, as carried by Reuters.
The ban benefits U.S. firm First Solar (NASDAQ: FSLR), whose shares jumped from $80 on Wednesday to $86 on Thursday after the ban was announced.
Cowen & Co analyst Jeff Osborne sees the news of the ban "as a positive for First Solar given they do not use polysilicon," he said in a note cited by Bloomberg.
Roth Capital Partners, however, thinks that the ban will affect the entire supply chain in the U.S. solar industry because every importer of solar modules will have to prove that they are not importing products made with Hoshine materials.
Polysilicon analyst Johannes Bernreuter with Bernreuter Research is of the same opinion. According to Bernreuter, all eight of the world's largest polysilicon manufacturers are customers of Hoshine.
A policy brief from the Peterson Institute for International Economics (PIIE) this month said that the Xinjiang region has a dominant global position in polysilicon, accounting for nearly half of global production.
The U.S. Solar Energy Industries Association (SEIA) welcomed the Biden Administration's decision to ban Hoshine-sourced solar panel materials. SEIA leads an industry-wide effort to create supply chain traceability to ensure products are not connected with forced labor in Xinjiang or anywhere else in the world.
Meanwhile, the U.S. solar industry is breaking records, installing 5 GW of new capacity in the first quarter, up by 46 percent on the year and the largest Q1 on record, the Solar Market Insight Report 2021 Q2 from SEIA and Wood Mackenzie showed.
Solar accounted for 58 percent of all new electricity-generating capacity added in the United States in Q1 2021, with wind making up most of the remainder.
Overall, the U.S. solar market surpassed 100 GWdc of installed electric generating capacity, doubling the industry's size over the last 3.5 years, WoodMac said. The consultancy expects 160 GW of solar capacity to be installed in the United States from 2021 to 2026, bringing the total installed photovoltaic solar capacity to more than 250 GW by the end of 2026.
However, the report also noted the recent jump in raw materials prices, especially for polysilicon, which is part of the U.S. ban on imports of materials sourced from Hoshine.
"Compounding cost increases across all materials started at the end of Q1 and are beginning to affect installers now," the SEIA/Wood Mackenzie report said.
Surging costs across the solar value chain, coupled with the ban on Xinjiang-sourced materials for solar panels, could have a cooling effect on the hot solar market in the United States in the coming quarters.
By Tsvetana Paraskova for Oilprice.com
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