The U.S. solar industry is facing further module shipment delays after new import documentation was required by Customs and Border Protection (CBP).
As part of the enforcement process for the new Uyghur Forced Labor Prevention Law (UFLPA), CBP is now requesting documentation showing the source of quartzite used in the polysilicon manufacturing process.
A research note published by Philip Shen of investment bank ROTH Capital Partners suggested that shipments to the United States from Southeast Asia could be delayed by up to 12 months as module makers run out of such documentation.
Shen, who also noted that shipments from a major module maker have already been seized, said the app “could be a major headwind in the near term.”
The development follows the entry into force of the UFLPA on June 21. Among the key provisions of the law is the requirement that CBP apply a “rebuttable presumption” that all goods produced or manufactured in whole or in part in China’s Xinjiang region are presumed to have been made with forced labor and are prohibited from entering the United States.
Xinjiang produces about half of the world’s polysilicon, which is among the high priority sectors for the application of UFLPA.
CBP has already asked about the source of quartz supply as part of Hoshine’s suspension of release (WRO) order, according to Christian Roselund, senior policy analyst at the chain traceability company. Clean Energy Associates (CEA) sourcing, which said it was unclear at this stage whether Customs requires a higher standard of documentation for quartz sourcing than in the past.
“There seems to be different levels of readiness at different vendors regarding quartz sourcing documentation,” Roselund said. “And while the detentions are creating uncertainty in the market, some of the largest suppliers are still shipping to the United States.”
Orientation published earlier this monthCBP said importers may consider submitting a flowchart that maps each step in the sourcing and production of all materials and identifies each material’s region of origin in production, such as the location of quartzite used to make polysilicon.
The guidelines state that importers should be aware that imports of goods from factories that source polysilicon from both inside and outside Xinjiang are likely to be held up, as it may be more difficult to verify that the supply chain uses only non-Xinjiang polysilicon and that materials have not been substituted or mixed with Xinjiang polysilicon at any point in the manufacturing process.
The Department of Homeland Security released a list of entities earlier this month whose products are allegedly made with forced labor and are barred from entering the United States. Among the companies on the list are Hoshine Silicon and subsidiaries of polysilicon producers Daqo, East Hope and GCL.
A February report from the U.S. Department of Energy said UFLPA’s impact on the solar supply chain “could be profound” over the years the law is in effect (2022-2029). if the Chinese government prevents solar companies from providing the documentation required by the Forced Labor Enforcement Task Force to prove that their goods are compliant.
Wacker, which supplies solar-grade polysilicon from its plants in Germany and the United States, “has successfully supported polysilicon customers under the previous WRO ruling and will continue to do so under the new UFLPA requirements,” said Christian Westermeier, vice president of sales, marketing and application technology at Wacker Polysilicon.
Westermeier added: “Around the world, Wacker respects human rights and expects the same from its partners and suppliers.”