Industry status
Since March, the price of crude oil has risen to more than US $100 / barrel, superimposed on the repeated impact of China’s epidemic on logistics and demand, and the price transmission of downstream chemicals such as polyester industrial chain and olefins is not smooth. We believe that the raw material cost pressure of high oil prices may gradually appear in 2q22, and we expect refining and chemical enterprises to be impacted by profits. Among the main products of refining and chemical integration enterprises, refined oil, aromatics (including PX and pure benzene) and butadiene have not been affected at present. However, chemical products such as polyester filament, EO / eg, polyolefin and styrene have been greatly impacted, and the price of some products has been inverted. Among many olefin downstream chemicals with narrowed profits, EVA and vinyl acetate bucked the trend and expanded profits. We remain optimistic about the rapidly growing demand for new energy related materials, and pay attention to the changes in the supply of new production capacity and the pattern of the industry.
Commentary
In 2022, the demand for photovoltaic grade EVA corresponds to one million tons, and we expect it to remain in a tight balance pattern. We expect that the demand for EVA for photovoltaic is expected to increase to more than one million tons in 2022, and more than Shanghai Pudong Development Bank Co.Ltd(600000) tons of EVA resin will be added in 2023 compared with 2021. The rapidly growing demand needs new capacity matching.
In 2021, China has put in 800000 tons of new EVA production capacity, and 620000 tons of production capacity will still be put in 2022. EVA has entered the peak of localization. However, considering that there are not many new devices that can stably produce photovoltaic materials at present, and mass production takes time, we expect that photovoltaic grade EVA will still be in a tight balance pattern in 2022, and it is not yet the time point of decline in prosperity. The rise of EVA price since February also reflects the current tight supply situation. Relevant listed companies Jiangsu Eastern Shenghong Co.Ltd(000301) , Rongsheng Petro Chemical Co.Ltd(002493) and Levima Advanced Materials Corporation(003022) have the capacity of 300000 tons, 300000 tons and 150000 tons of EVA respectively, and all have the supply capacity of photovoltaic products.
The expansion of vinyl acetate production is slower than EVA, and the prosperity is expected to be high in 2022. From 2016 to 2020, China has no plan to expand the production of vinyl acetate. From 2021 to 2023, the first wave of EVA new production capacity reached 1.69 million tons, corresponding to the demand of 340 Sichuan Jinlu Group Co.Ltd(000510) 000 tons of vinyl acetate. It is expected that the new production capacity of ethylene acetate will erode at least two degrees before 2023. We expect 1h21-1h23 to be the time window of supply-demand mismatch between vinyl acetate and EVA. The mainstream methods of vinyl acetate production include ethylene method and calcium carbide acetylene method. The profit of ethylene method has soared in 2021. Calcium carbide method is subject to the high price of calcium carbide and the fluctuation of “double control of energy consumption”. After the price of calcium carbide fell in 2022, the profit of calcium carbide acetylene method has also increased greatly. Relevant listed companies Anhui Wanwei Updated High-Tech Material Industry Co.Ltd(600063) have a capacity of 450000 tons of carbide acetylene process and Sinopec Shanghai Petrochemical Company Limited(600688) have a capacity of 90000 tons of ethylene process.
Valuation and recommendations
Maintain the profit forecast, target price and rating of relevant covered companies unchanged.
Risk
The newly installed photovoltaic capacity is less than expected; New capacity expansion and mass production speed exceeded expectations.
