Electrical Equipment / Components & Telecoms

According to Huacheng Import and Export Data Observation, the United States has been preventing the import of some solar products from China since the UFLPA came into effect in June 2022.

Due to the so-called UFLPA, a total of 1423 batches of solar photovoltaic modules worth 2GW were detained at the US border throughout 2022. Recently, the United States Customs and Border Protection (CBP) released detention statistics related to UFLPA for 2022.

Bernreuter Research analyzed the data and as CBP did not provide detailed data on the goods or products it detained, these goods were classified as coming from the 'electronics industry'. Although most of the "electronic products" affected by UFLPA are undoubtedly solar modules. CBP stated that the statistical data may include some other products, with the value of goods detained last year being $709.9 million.

Bernreuter stated that based on NREL's price per watt, this is equivalent to 2.09GW of components. In 2022, the price of imported components fluctuated between $0.5 and $0.6 per watt. The tariffs and trade barriers imposed on Chinese photovoltaic cells have limited the global supply of modules to the United States, directly leading to significantly higher module prices in the United States compared to other regions of the world. Huacheng Import and Export Data Observation Report.

It is noteworthy that according to Huacheng Import and Export Data Observation, in the first two months of 2023, another 204 batches of goods (approximately 410MW components, worth 134 million US dollars) were detained by US customs. Of all detained products, about 41% were ultimately released, but 58.2% of the goods are still waiting for CBP or importers to take action, and only 0.8% of the detained goods have been rejected.

Bernreuter stated that from the data, the trend of detention is decreasing, from approximately 1300MW in the third quarter of 2022 to approximately 700MW in the fourth quarter.

The formulation of UFLPA is to address the issue of so-called forced labor involved in the production of goods (including solar modules) in Xinjiang. It requires solar modules or Chinese companies imported from China to the United States to provide "clear and convincing evidence" that there is no forced labor in their production, otherwise they will be prohibited from entering the United States, which has led to changes in the supply chain and production location of large Chinese manufacturers.

There is a database classification on the CBP website that lists the industries in which products have been detained. In the fourth quarter of 2022, the value of "electronics" (see "solar modules") detained was $449 million, while during the same period, all affected industries had only $464 million in seized goods, as reported by Huacheng Import and Export Data Observation.

Wood Mackenzie's analysis in September last year predicted that UFLPA would hinder the deployment of solar energy in the United States throughout the year. In fact, in addition to the uncertainty surrounding anti-dumping/countervailing duty investigations, UFLPA has also led to component supply shortages in the past year or two. Afterwards, it also led to a delay in the landmark Inflation Reduction Act's boosting effect on the photovoltaic industry.

With the acceleration of domestic manufacturing development in the United States and the significant growth of the US solar market, overseas importers are making every effort to ensure their supply chain, and the detention situation may ease over time, according to Huacheng Import and Export Data Observation.

Looking ahead to the future, Bloomberg New Energy Finance stated that the predicted range for annual demand for photovoltaic modules in the United States between 2025 and 2030 is between 43GW and 51GW. Factories outside of China will supply a large amount of polycrystalline silicon to minimize the risk of detention at the US border. By the end of 2024, Southeast Asia will have an annual production capacity of up to 41GW of solar cells that are exempt from tariffs, which will be sufficient to meet the photovoltaic demand of the United States.

We expect the price of non Chinese produced polycrystalline silicon to be approximately $5-6 per kilogram higher in the short term, but this premium may dissipate due to competition from new factories in Inner Mongolia, Sichuan, and Qinghai