Longji components withheld at the US border "temporary withholding order" after the spread of the crisis, it may become more difficult to export to the United States.

On November 3rd, it was reported that some products of 601012.SH were being detained at the US border. After-hours notice shows that, after verification, the United States Customs withheld a total of Longji shares of 40.31MW component products.

Longji said in the announcement that the company's shipments to the US market are still in normal progress to meet the order needs of US customers.

However, there are still people in the industry who have expressed their concern. According to the temporary withholding for Hesheng Silicon-based products issued by US Customs (CBP), (WRO), is required to prove that the polysilicon raw materials purified by Hesheng Industrial Silicon are not included in the supply chain. The analysis shows that it is difficult to replace silicon and self-certification, and the tightening of relevant policies may increase the difficulty of exporting photovoltaic products to the United States.

On the same day, Longji shares fell sharply in intraday volume, falling more than 9% at one point, closing at 91.00 yuan, down 8.98% from the previous trading day, and the latest market capitalization of 492.6 billion yuan.

Test the risk response ability of component enterprises

On 3 November, it was reported that WRO, Lonji, which was released by the United States in June, could be the next component manufacturer of US customs and border protection operations; Lonji has been told that his seaborne cargo is expected to be stranded at five ports, which is expected to have a wide impact on Lonki.

According to the company's subsequent verification, from October 28, 2021 to November 3, 2021, the United States Customs withheld a total of 40.31MW component products exported to the United States by Longji Green Energy Technology Co., Ltd. and its US subsidiaries in accordance with the temporary detention order (WRO), which accounted for about 1.59% of the company's exports to the United States in 2020.

The related frictions not only increase the cost and risk of Chinese photovoltaic going to sea, but also test the risk response ability of component enterprises. In the latest announcement, Longji said that since the second half of 2020, it has established and improved (WRO) management measures to deal with temporary withholding orders, including product traceability and system construction, external organization certification, supplier management and other corresponding measures. The company actively responds to and cooperates with the US Customs to provide corresponding traceability evidence to ensure that the products detained by the company can be lifted as soon as possible, and continue to promote the global market layout and capacity building of the photovoltaic industry.

The company said that its sales region is global and will not rely heavily on the single market in the United States. However, based on the above data, Longji still exported more US components than 2.5GW in 2020. In addition, the company previously said on the investor interaction platform that its sales in the United States accounted for about 15% of its revenue in the first half of 2021. Combined with China News data, Longji shares sold about 5 billion yuan in the United States in the first half of the year.

Longji became the largest shipper of photovoltaic modules in the world in 2020, with a market share of about 19%. According to the report, Longji achieved single crystal component shipments 17.01GW in the first half of the year. Of this total, external sales were 16.60 GW, an increase of 152.40% over the same period last year. The share of component revenue increased from 57% in the first half of 2020 to 67% this year. At the same time, Longji is also an important wafer manufacturer, with single crystal wafer production of 38.35GW in the first half of the year, an increase of 51.73% over the same period last year.

There are several ways to restrict the export of photovoltaic to the United States.

Longji is not the first Chinese photovoltaic company to have its module products detained by the US border this year. Prior to this, including Jingke Energy (JKS), Ates (CSIQ), Trina Solar (688599.SH) and other enterprises have been exported to the United States photovoltaic products have been detained by border customs.

An industry analyst told the Financial Associated Press that the incident was a temporary withholding order (WRO) for Hesheng Silicon-based products issued by the US Customs (CBP) at the end of June this year. Hesheng's silicon-based products themselves are not exported to the United States, and what is affected is the ban on the export of crystalline silicon photovoltaic modules made from polysilicon purified from Hesheng industrial silicon to the United States.

In the latest announcement, Longji proposed that it will actively respond to and cooperate with the United States Customs to provide corresponding retrospective evidence. However, the person's analysis believes that most of the domestic polysilicon enterprises purchase Hesheng industrial silicon, and it is difficult for enterprises to prove themselves. Before the supply chain traceability certificate provided is not recognized by the United States Customs, there is still a high possibility of withholding products from the United States.

Hesheng Silicon Industry, with an annual production capacity of 760000 tons, is the largest industrial silicon producer in China, and industrial silicon is the upper reaches of polysilicon. Some analysts believe that if the United States continues to ban the import of metal silicon from Hesheng Silicon and its subsidiaries, as well as the use of goods and solar energy products derived from or produced by Hesheng Silicon, the scope of the impact may be expanded.

In fact, the United States has long been in place to restrict the export of photovoltaic products to China, among which the "double reverse" investigation began in 2011 and has shown a trend of continuous tightening after a decade of development. In August this year, US solar energy manufacturers formally submitted an application to the US Department of Commerce, requiring that crystalline silicon photovoltaic cells and modules produced by specific manufacturers, such as silicon wafers made in China, were assembled in Vietnam, Thailand and Malaysia and exported to the United States. The companies involved include Trina Solar, Ates, Jingke Energy, Jingao Solar, Xiexin Integration, Longji Group, etc. Almost covered the domestic head component manufacturers.

With regard to the relevant situation, a spokesman for the Ministry of Commerce pointed out that the United States has once again used its national power to carry out protectionism and hegemonism in the name of so-called "human rights," which is a serious damage to the international economic and trade order and a serious threat to the security of the global industrial chain supply chain. The United States should immediately correct its erroneous practices. We will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises and institutions.