As we reported a couple months ago, U.S. Customs and Border Patrol has been blocking shipments of some imports of solar products on the basis of ties to forced labor in China. Some details have emerged for one company in particular, JinkoSolar.
On June 24, the Department of Homeland Security announced that U.S. Customs and Border Protection (CBP) had issued a Withhold Release Order (WRO) on imports from the Chinese company Hoshine Silicon Industry Co. Ltd. "based on information reasonably indicating that Hoshine uses forced labor to manufacture silica-based products." This WRO "instructs personnel at all U.S. ports of entry to immediately begin to detain shipments containing silica-based products made by Hoshine and its subsidiaries."
The Washington Post reported several weeks ago on the impact this WRO was having on producers of finished solar products using inputs made by Hoshine, noting that "U.S. officials have begun blocking the import of solar panels that they believe could be products of forced labor in China." The article then offers more specific details related to the company JinkoSolar:
Philip Shen, a solar-industry analyst with Roth Capital Partners, said his discussions with power utilities and other panel buyers indicate that JinkoSolar, based in Shanghai, has been among the hardest-hit manufacturers, with CBP detaining panels capable of generating about 100 megawatts worth of electricity.
This issue was raised in greater detail at a JinkoSolar earnings call on September 15, in which Shen asked the JinkoSolar CFO Charlie Cao about the issue. Cao acknowledged that "we did have some modules stopped by the U.S. CBP and to request additional documentations." He noted that the company is "still in the process in the preparation of relevant documentations," and that "at this stage, we are cautiously optimistic for the results." (See the full exchange at the end of this piece).
At a Chinese Ministry of Foreign Affairs press conference on September 22, spokesperson Zhao Lijian was asked about the JinkoSolar situation, but did not respond directly to the impact on that company, instead offering the more general response that "[t]he allegation of 'forced labor' in Xinjiang is an outright lie." (See the full exchange at the end of this piece).
Annex:
JinkoSolar September 15 earnings call discussion of WROs on solar panels:
Philip Shen -- ROTH Capital Partners -- Analyst
... And then how much -- with the WRO enforcement, how much product has not made it -- how much of your product from Malaysia has not made it to the U.S. shores thus far? And what is the impact of that on Q3 results? Because I think in your prepared remarks, you talked about opex should be flat ahead except or excluding shipping costs.
And so to what degree -- how much product has been not able to get to the U.S. shores? And then how much is it costing you to store that product because my understanding is it can be quite expensive. And have you been able to find other markets for that product? Or do you expect to wait for that product to make it to the U.S.? Thanks.
Charlie Cao -- Chief Financial Officer
So, yes, we did have some modules stopped by the U.S. CBP and to request additional documentations. And we are still in the process in the preparation of relevant documentations. And at this stage, we are cautiously optimistic for the results.
And it did have -- because it's going to take time, so it did have some impact on our shipments to the U.S. market. And in terms of the storage, we did have additional -- we are expecting to incur additional storage for the inventories and waiting for the preparation of the relevant documentations. And back to question now is the solar demand pretty strong? And I think it's not the demand issues.
It's just globally, it's just the supply chain and the higher supply chain cost and production capacity bottleneck.
Philip Shen -- ROTH Capital Partners -- Analyst
OK. Charlie, sorry to ask the question again, but can you quantify how much product has not been able to make it to the U.S.? And what the cost might be to store that?
Charlie Cao -- Chief Financial Officer
Well, in the process evaluation additional costs, it did have, as I said, negative impact on the shipments to the U.S. as well as the gross margin, even net profitability in the short term, but we are not in a position to disclose the detailed number.
China Review News: JinkoSolar Holding Co., Ltd. said some of its solar panels have been stopped at the border by US Customs and Border Protection (CPB) citing concerns that the products may contain material produced by forced labor in China's Xinjiang region. Do you have any comment?
Zhao Lijian: The allegation of "forced labor" in Xinjiang is an outright lie. The Chinese side has repeatedly clarified the matter with facts and truth on various occasions. More and more people in the international community have also spoken up for justice on this. Now the US is using this outrageous lie as a pretext to wantonly detain solar products by a Chinese company and the word "may" they used indicates that nothing is beneath them. This once again exposed the sinister intention of the US to undermine Xinjiang's development. It will also disrupt international industrial and supply chains and undercut global efforts to deal with climate change. The Chinese side will take all necessary measures to safeguard its businesses' legitimate rights and interests. The US should immediately correct its mistake and stop the wanton suppression targeting Chinese companies.
