Core view
Driven by new energy, the demand for soda ash is expected to usher in new growth. In the apparent consumption of soda ash in China in 2021, flat glass, daily glass and photovoltaic glass accounted for the highest proportion, accounting for 46.8%, 16.8% and 8.2% respectively. The corresponding end markets of these glass products are mainly real estate and new energy industries. With the vigorous development of new energy industry, the demand for upstream raw materials is expanding day by day. Among them, the new energy industry represented by photovoltaic power generation and electric vehicles has gradually become the main growth point of soda ash demand. In terms of photovoltaic, according to CPIA's prediction, under the optimistic situation in 2022, the new installed capacity of global photovoltaic will reach 225gw, with a year-on-year increase of 32.4%. Among them, the new installed capacity in China will be 75gw, with a year-on-year increase of 15.4%. In terms of electric vehicles, with the continuous expansion of lithium carbonate, the demand for soda ash is increasing. From 2022 to 2023, 23 lithium carbonate projects of Tianqi Lithium Corporation(002466) , Kunlun lithium industry and other enterprises will be put into operation. It is estimated that the total new lithium carbonate capacity will reach 218000 tons, and the industry will maintain a high expansion rate. If all production plans are implemented on schedule, the demand for soda ash will increase by 392400 tons in theory.
China's soda ash supply is faced with the withdrawal of backward production capacity and the restriction of new production capacity. In terms of capacity withdrawal, the country's total ammonia alkali process capacity withdrawn from 20212023 is 1.9 million tons, accounting for 5.6% of the country's total capacity in 2021. In terms of new capacity, there are few new capacity in the short term, and in the long term, the new capacity is mainly concentrated in the natural alkali process. A total of 440000 tons will be put into operation in 2021 and 850000 tons will be added in 2022, all of which are combined alkali method. It is estimated that the national net new capacity will be 10000 tons from 2021 to 2022. Under the background of economic recovery and increasing demand after the epidemic, the withdrawal of old production capacity will put some pressure on the supply of soda ash in 2022.
Under the "carbon neutralization" policy, the supply may be tight in the future, and the natural alkali method has obvious advantages. According to the Guiding Catalogue for industrial structure adjustment revised and issued by the national development and Reform Commission in 2019, except for natural alkali, it is difficult to improve the capacity of soda ash in the future. In addition, the cost of natural alkali method is lower than that of combined alkali method and ammonia alkali method. The production cost of soda ash mainly includes raw material cost, power coal cost, electricity cost, etc. with the increase of production cost in the future and the guidance of carbon neutralization policy, the soda ash industry should have the most advantage in the future.
The price is still in the upward channel, and the inventory changes with seasons. Since the beginning of 2021, the price of soda ash has risen sharply. As of March 25, 2022, the market prices of light soda ash and heavy soda ash have been reported at 2543 yuan / ton and 2643 yuan / ton respectively, which are still in the upward channel. At present, soda ash inventory has rebounded from the low point and temporarily occupied a high level, which is expected to fall in the second half of the year. Since 2022, China's soda ash factory inventory has decreased from 1.5 million tons at the beginning of the year to 1.03 million tons on February 25, and has rebounded to a high of 1.2 million tons as of March 25. According to the seasonal effect of soda ash inventory, we expect that the inventory is expected to fall in the second half of 2022 driven by demand.
In the short term, the growth of China's soda ash production capacity is limited in 2022, the downstream demand needs to be released, and the supply and demand may tighten; In the long run, the new energy industry will drive the growth of soda ash demand, and the soda ash industry is expected to usher in a boom.
Investment advice
Under the boom of soda ash industry, relevant targets may benefit, such as Inner Mongoliayuan Xing Energy Company Limited(000683) , Tangshan Sanyou Chemical Industries Co.Ltd(600409) , Sichuan Hebang Biotechnology Co.Ltd(603077) , Shandong Haihua Co.Ltd(000822) , etc.
Risk tips
The safety and environmental protection policies have been upgraded, the growth of photovoltaic installed capacity has slowed down, and the promotion of new energy vehicles is less than expected.
