US sanctions over Xinjiang: Updates

Following the investigation on solar products from Xinjiang began this April, the U.S. is stepping up pressure on China recently. The U.S. Customs and Border Protection (CBP) is expected to issue a new Withhold Release Order against products from Hoshine Silicon Industry Co., Ltd, the world’s largest industrial silicon manufacturer, on June 24 US local time. Products related to the company may be banned from exporting into the U.S. unless it is certified they are not produced with forced labor in Xinjiang.

The U.S. Department of Commerce imposes additional license requirements to restrict exports to five entities from China, namely Hoshine Silicon Industry Co., Ltd, Xinjiang Daqo New Energy Corp., GCL-Poly Energy Holdings Limited, East Hope Nonferrous Metals Co. Ltd, and Xinjiang Production and Construction Corps, XPCC.

Industrial silicon is the raw material of polysilicon used in solar production. As silicon manufacturing consumes lots of energy, Xinjiang becomes a major industrial silicon production hub owing to the region’s cheap electricity and close location to mining area. At present, the region accounts for 40% of China’s industrial silicon production. Hoshine Silicon alone represents around 50% of the industrial silicon production in Xinjiang. In 2020, the manufacturer contributed to around 16.7% of global silicon output.

Since industrial silicon is used widely in industrial productions and involves in complex downstream business, many polysilicon manufacturers outside of Xinjiang also use products from Hoshine Silicon. Therefore, the order will not only affect industrial silicon from Hoshine Silicon but products related to the company.

InfoLink learned from sources familiar with the issue that no further details are available now. However, as the issue has been pending and brought up again, it may cause impact soon. InfoLink is watching for further policy announcements tonight at US local time. Tier-1 manufacturers in China, on the other hand, have been preparing solutions to the issue previously, with no further news thus far.

Overall, if modules and cells exported to the U.S. have to be traced back to whether they use products from Hoshine Silicon, the scope of impact will be so big that it will not only affect US-based polysilicon and module manufacturers but renewable installations in the U.S., as it will become difficult to acquire enough modules. At the meantime, thin-film module manufacturer First Solar will benefit from the sanctions because thin-film modules are not made of polysilicon and industrial silicon.

InfoLink will monitor closely the U.S.’ move tonight and provides further details tomorrow.