(Bloomberg) — Two of the world’s biggest solar manufacturers are diverting some panels away from the U.S. as shipments there get detained by Customs.
Executives at both Longi Green Energy Technology Co. and Jinko Solar Co. said in earnings calls this week that they face challenges brought on by the disruptions, and are looking to rising demand in Europe to help offset slowing U.S. sales.
Longi, the world’s largest solar module manufacturer, said the company is adjusting its sales target to the U.S. this year after it was only able to ship 200 megawatts of panels in the first quarter. “Almost every order will be checked and detained,” Zhong Baoshen, the company’s chairman, said on Wednesday.
U.S. Customs started to detain solar products shipped by Chinese manufacturers including Longi and Jinko in the second half of last year. The government has banned some solar material from Xinjiang due to alleged human rights abuses in the region, which Beijing has repeatedly denied.
Chinese solar companies are shifting supply chains outside of Xinjiang and even China amid the scrutiny. Jinko is ramping up solar wafer production capacity in Vietnam, according to Chief Financial Officer Charlie Gao.
The situation for the panel makers is also complicated by a U.S. Commerce Department probe into whether Chinese solar panel makers’ Southeast Asian companies are circumventing tariffs. Longi plans to divert some solar panels produced in its Southeast Asian facilities to countries and regions including Canada, Taiwan, Europe, and India, according to Zhong.
Rising Costs
Longi and Jinko are also seeing gross margins hit by rising supply-chain costs. Longi had lowered some production in 2021 due to the soaring price of polysilicon, a key material, the company said Wednesday. Polysilicon prices almost tripled last year, and have been on the rise again this year after dropping briefly toward the end of 2021.
Meanwhile, China’s lockdowns to battle Covid outbreaks also weighed on the industry.
“Epidemic prevention and containment policies in China since March have resulted in logistics congestion and sharp reductions in transport capacity, which further increased cost pressures,” Li Xiande, Jinko’s chairman, said in an earnings statement.
Li added that the impact of the pandemic is temporary, and the “continuous release of polysilicon supplies will aid the industry’s gradual recovery.”
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