Half year summary: EVA supply and demand drive the center of gravity to move up, and the second half of the year is especially suitable for the peak season

Introduction

In the first half of 2022, despite the pressure of new capacity expansion, the EVA market is full of resilience and the price shows an upward trend. The high price of upstream crude oil, at the same time, the performance of photovoltaic demand exceeded expectations, and EVA enterprises increased the production of photovoltaic grade EVA, thus reducing the pressure on the market circulation. All these are important factors supporting the further upward shift of EVA price focus in 2022. In the second half of the year, the expansion speed of EVA production capacity was further accelerated, and the peak season of terminal "gold, nine silver and ten" demand also gave the market more expectations, and the supply and demand game continued to upgrade. The market influence factors are colorful and complex. Where is the price of EVA? This article will mainly analyze the price trend changes and driving factors in the first half of the year, and predict the price trend and important concerns in the second half of the year.

Price: EVA breaks through the haze and the price center continues to move upward

In the first half of 2022, despite the pressure of new capacity expansion, the EVA market is full of resilience and the price shows an upward trend. In the first half of the year, the overall EVA price showed a rise first and then a decline. From January to may, the price fluctuated higher, and fell slightly in June. The average EVA price was 23142 yuan / ton, up 18.26% year on year. The lowest point was 17700 yuan / ton in early January and the highest point was 27000 yuan / ton in early May. After the Spring Festival, with the rapid rise of crude oil prices, EVA production costs rose rapidly. At the same time, photovoltaic demand started earlier than expected, the operators were optimistic, and the market supply was tight. EVA prices rose all the way.

In the second quarter, the demand of foam, hot melt adhesive and other industries was slightly weakened, but the demand for photovoltaic materials was still relatively strong. The production of photovoltaic materials of EVA manufacturers was highly motivated, and the supply of other goods remained tight. In addition, the import was restricted and the supply and demand of EVA market was obviously unbalanced. From April to may, a wave of "off-season not light" market emerged, and the high price of EVA was supported. However, since June, under the influence of the Federal Reserve's interest rate increase, the bulk commodities have been under pressure as a whole, and the mentality of EVA operators has weakened. At the same time, with the gradual release of inventories in some ports in East China, the import supply has returned to the normal level. With the weakening of PV demand and the full release of goods held in the port, the supply side of EVA market is under obvious pressure. The end industry has entered the off-season of demand, and the EVA price is under pressure.

Supply: the total supply has steadily increased, and domestic and imported ice and fire

Capacity and output both increased, photovoltaic EVA accounted for more than half

In 2022, the pace of EVA capacity expansion continued to accelerate. By June 2022, the total capacity of China's EVA industry reached 1.922 million tons, an increase of 30.57% over the previous year. Among them, in December 2021, the 300000 ton tubular unit of Zhejiang Petrochemical Company was put into production, in March 2022, the 100000 ton kettle type unit of scientific refining and chemical company was put into production, and in March 2022, LianHong Petrochemical completed the capacity expansion, from 100000 tons to 150000 tons. (Note: the next month after the stable production of the newly put into operation units is included in the production capacity, so the production capacity of the units put into operation in December 2021 of Zhejiang Petrochemical is included in the calculation of 2022)

With the expansion of production capacity, the domestic production of EVA appeared from January to June 2022. The domestic production of EVA was 795900 tons, an increase of 389700 tons over the same period last year, an increase of 95.93% over the same period last year. In the first half of 2022, although Lianhong petrochemical and Yangzi Petrochemical have been shut down for a long time, the production of new units of China Science and technology refining and Zhejiang Petrochemical and the capacity expansion of LianHong Petrochemical still show a substantial increase in EVA production in the first half of 2022.

From the perspective of domestic production, PV grade EVA accounts for 53%, up 15% year-on-year, and is the fastest growing source of EVA production. In addition, the proportion of foam, cable and film materials decreased, and the proportion of other sources of goods increased slightly. According to statistics, from January to June of 2022, the output of photovoltaic materials will be 420700 tons, with a year-on-year increase of 174.02%, an increase of 53.69 percentage points over the same period of last year, and the growth of photovoltaic materials will far exceed the total growth of EVA. Thus, the domestic circulation of goods decreased year on year. This has also become an important factor that the pressure on the supply side of EVA market is not obvious under the background of double growth of production capacity and output.

Combined with multiple factors, EVA imports continued to decline in the first half of the year

From January to may 2022, the accumulated EVA import volume was 442600 tons, a decrease of 65200 tons over the same period of last year, a year-on-year decrease of 12.84%, and the growth rate was 30.55 percentage points lower than the same period of last year. The main reason is that, on the one hand, new domestic production capacity is released intensively, and importers reduce import volume to avoid risks. The second reason is the shortage of shipping resources and the rise of freight. The third reason is that foreign businessmen increase the supply of high equivalent regions in Southeast Asia and reduce the supply to China. The import volume is expected to gradually return to normal in the second half of the year, but the annual increase is expected to be limited.

From the perspective of import source countries, South Korea, Taiwan and Thailand accounted for the top three in import volume, and Singapore and Japan jumped into the top five in EVA import volume. South Korea has the largest increment, with a year-on-year increase of 12%, an increase of 12 percentage points over the same period of last year, which is closely related to the conversion of 300000 tons of LD / EVA new production capacity of Lotte and Hyundai to Eva.

Demand: PV boosts EVA terminal demand

From January to may 2022, the accumulated apparent consumption was 1.0514 million tons, with a year-on-year increase of 31.23%, an increase of 21.05 percentage points over the same period last year. Since 2022, the trend of steady growth of EVA demand has remained unchanged. Under the restriction of external environment haze, the commencement of traditional EVA industry has declined in stages. However, the total EVA demand in the first half of the year has increased steadily, mainly driven by the new energy industry.

From the perspective of the commencement of the terminal industry, the commencement of the terminal industry in the first half of 2022 can be described as a double heaven of ice and fire. However, the composite commencement rate of EVA terminal is supported by the high-tech industry, and is better than that of the same period last year. In the first half of the year, the production of terminal enterprises was greatly affected by two aspects. First, due to the constraints of the external environment, the logistics transportation in some areas was limited, and some terminal enterprises stopped production. The second aspect is the high crude oil price and the rapid rise of EVA price, which leads to the compression of profits of some enterprises and thus affects demand.

From the perspective of specific terminal industries, for traditional industries, the commencement of enterprises is affected by the external environment in stages, and the commencement rate decreases in stages. For some foreign trade enterprises, medium and long-term foreign trade orders will be affected, especially in shoe materials and other industries. The whole impact will run through the first half of the year. However, on the optimistic side, due to the existence of 618 e-commerce Festival, the boundary between off-season and peak season of some industries such as shoe materials has been weakened. Especially under the traditional off-season in the late second quarter, the production time of enterprises has been delayed, and the commencement time is better than that in the same period of last year. For the photovoltaic and other new energy industries, due to the delay of some domestic photovoltaic projects in the second half of 2021 and the increase in module exports caused by obvious export advantages, the demand for EVA by photovoltaic in 2022 shows a good growth momentum. The commencement of the film plant before May is higher than that of the same period last year, which also supports the EVA terminal load operation rate in the first half of the year to a certain extent.

In recent years, the proportion of PV in the downstream consumption of EVA has increased year by year. In 2021, the consumption proportion has reached 37%, while the demand of foaming industry has reached 28%, and the two accounts for more than 50%. The above factors have also become an important factor to pull the composite operating rate of EVA terminals higher than that of the same period last year.

Cost and profit: cost and profit both follow the Plateau oil path, and the cost advantage is weakened

In the first half of 022, the EVA price showed a stepwise upward trend. Affected by this, the enterprise's production profit showed a positive trend. Under different paths, the overall EVA profit showed a trend of first falling and then rising. The profit fluctuation showed an irregular "V" trend, and the profit center moved upward. It is worth noting that the profitability of crude oil route EVA is significantly lower than that of methanol route EVA due to the impact of high oil price. Specifically:

Under the oil production route in the first half of 2022, the average profit of EVA is 11287 yuan / ton, an increase of 1971 yuan / ton over the same period last year. The lowest point of profit appears in the first ten days of February, the lowest is 7039 yuan / ton, the highest point appears in the first ten days of May, the highest is 15273 yuan / ton, the maximum fluctuation is 8234 yuan / ton, an increase of 5612 yuan / ton over the same period last year. The cost of the production enterprise is 13339 yuan / ton, an increase of 2884 yuan / ton or 27.58% over the average price in the first half of 2021. In the first half of the year, crude oil as a whole showed a fluctuating upward trend. Compared with the same period last year, the overall operating range moved upward, the cost of oil based EVA increased, and the profit of producers fell, but the overall growth trend was still present.

Under the methanol route in the first half of 2022, the average profit of EVA is 11492 yuan / ton, 3186 yuan / ton higher than that of the same period last year. The lowest point of profit appears in the first ten days of February, with the lowest of 5675.45 yuan / ton, and the highest point appears in the first ten days of May, with the highest of 15909.45 yuan / ton. The maximum fluctuation range is 10234 yuan / ton, 7238.40 yuan / ton higher than that of the same period last year. The cost of production enterprises was 13028 yuan / ton, an increase of 1631 yuan / ton over the average price in the first half of last year, an increase of 14.31%. In the first half of 2022, after the domestic methanol market surged up, the overall price center increased compared with the same period of last year, which was smoothly transmitted to methanol to EVA, and the cost increased accordingly.

Forecast: the supply and demand game continues to upgrade, and the market in the peak season is still predictable

On the supply side, in the second half of the year, new production capacity such as Tianli hi tech, new unit of Gulei petrochemical and capacity expansion of Ningbo Formosa Plastics will be put into production. If the new production capacity can be put into production as scheduled, it is expected that China's EVA production capacity will reach 2.45 million tons in 2022, an increase of 66.44% over the previous year, an increase of 15 percentage points over the previous year. The centralized release of new production capacity will inevitably have a certain impact on the market. At the same time, Taiwan's Formosa Plastics, Sibang and other production enterprises all have the expectation of stopping for maintenance. In the case that the price difference between LD and EVA is too large, it is necessary to pay attention to the progress of converting LD devices such as Daqing to Eva.

On the demand side, the demand of the terminal industry in the third quarter will be gradually better than that in the second quarter. The arrival of the "golden nine silver ten" will give the market some support. In general, it is expected that the EVA market price in the third quarter will be suppressed first and then increased, or go out of a completely different trend from that in the second quarter. The market turning point can focus on the market performance after the middle of August. At the same time, we need to pay close attention to the trend of photovoltaic demand in the second half of the year. In 2022, the global PV installed capacity is expected to be 190-240gw, and the Chinese PV installed capacity is expected to be 75-90gw. The corresponding PV grade EVA demand may exceed 1.2 million tons, which will greatly relieve the pressure brought by the new capacity.

In general, the demand of EVA terminal industry in the second half of the year may be stronger than that in the first half of the year, especially in the peak season of "golden nine silver ten" terminal demand, which may provide good support to the market. However, we should also pay close attention to the impact of the Fed's interest rate increase on commodities. At the same time, in the second half of the year, we need to pay attention to the impact of the new EVA production capacity of Tianli hi tech and Gulei on the EVA supply side. It is preliminarily predicted that EVA prices may rebound and readjust after falling in the second half of the year. EVA prices are expected to continue to decline since the third quarter. The market turning point may be delayed after the "golden nine silver ten" terminal demand peak season comes. If the photovoltaic demand is later than expected, the market turning point may be delayed. In addition, at the end of the fourth quarter, we need to pay attention to whether the EVA market is under pressure after the release of new capacity.