The majority of solar panels are built using polysilicon, a material that is currently largely sourced from China. On Wednesday, top-grade polysilicon saw a nearly 2% rise in prices, according to the China Silicon Industry Association (CSIA).
After a decade of price declines, polysilicon is now at its highest price since 2011. The material’s cost to purchasers has risen for six straight weeks. In January 2021, one kilogram of Chinese polysilicon would fetch about $13. Now, prices exceed $43/kg.
The industry is in a sharp supply shortage as a major manufacturer in Xinjiang closed unexpectedly for repairs. The Xinjiang region in western China is home to nearly 50% of the world’s supply of polysilicon, and it is currently under scrutiny for credible allegations of forced labor.
CSIA said it expects polysilicon supply to drop roughly 5% in July compared to June. Bloomberg said prices are expected to continue to rise through the month until newly added factories displace the loss in production from sudden shutdowns. A rise in COVID-19 cases in China is causing shutdowns in the country, possibly further exacerbating the supply shortage in the near-term.
The Uyghur Force Labor Prevention Act (UFLPA) was passed this year to ensure that United States imports do not have connection to forced labor practices in the Xinjiang region. Last week, a large shipment of quartzite, an element used in making polysilicon, was detained by US Customs and Border Patrol. Analyst firm ROTH Capital Partners noted there is belief that product from both JinkoSolar and Trina Solar were seized by Customs, indicating the risk to the solar supply chain under the act may be higher than previously expected.
The UFLPA assumes a rebuttable presumption on goods shipped from the region, placing a heavy burden of proof on importers to show that there is no connection to forced labor. At the time of the House passing the UFLPA, U.S. Secretary of Labor Marty Walsh said, “The world and the American people cannot abide the presence of goods made under the exploitative conditions experienced by Uyghur and other ethnic minority groups in its global supply chains.”
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