Soda ash industry is in full loss, it will take time to get out of the bottom

The performance disclosure of listed companies in the first quarter is nearing completion. Judging from the performance of listed companies with soda ash as the main business, it can be described as a dismal operation, and the industry has suffered a total loss.

Industry insiders believe that although the industry has recently introduced a production restriction policy, the current downstream demand is still in a downturn. The fundamentals of oversupply of soda ash have not changed, and it will take time for the industry to come out of the bottom.

Prices fell to a decade low

Since the third quarter of last year, the domestic soda market has been shrouded in the shadow of high inventory and low consumption. After the Spring Festival, the spread of the New Coronary Pneumonia epidemic led to delays in the start of downstream enterprises. Demand fell sharply, and the stock of soda ash plants quickly increased from 500,000 tons a year ago to 1.3 million tons in early April, an increase of 1.6 times. High inventory dragged down the prices of soda ash.

According to Baichuan Yingfu statistics, the average price of the light soda ash market in East China in the first quarter was 1489 yuan (ton price, the same below), down 369 yuan year-on-year, down 93 yuan from the previous month; the average price of the heavy soda ash market in East China was 1641 yuan, down 443 year-on-year Yuan, down 179 yuan from the previous month. In early April, the price of light soda ash was 1,436 yuan, down 4.7% from the beginning of the year and 25% down from the same period last year; the price of heavy soda ash was 1,504 yuan, down 7.7% from the beginning of the year and down 23.4% from the same period last year. The prices of light soda ash and heavy soda ash are both at the end of the decade.

"At present, downstream demand is still sluggish, soda ash prices are still at a low level, and there is little change from the previous period." On May 15, Sanyou Chemical Securities staff said.

Production enterprise full loss

Along with the sharp drop in soda ash prices, the first quarter results of listed companies with soda ash as their main business suffered a loss across the board.

According to the announcement, soda soda leading company Shandong Haihua's main revenue in the first quarter was 863 million yuan, down 19.29% year-on-year; net profit loss was 20.6 million yuan, down 122.67% year-on-year. Sanyou Chemical's main revenue in the first quarter was 4.022 billion yuan, a year-on-year decrease of 22.37%; net profit loss was 213 million yuan, a year-on-year decrease of 210.81%. Hebang Bio's main revenue in the first quarter was 1.023 billion yuan, a year-on-year decrease of 28.31%; net profit loss was 31.32 million yuan, a year-on-year decrease of 127.7%. In addition, Hubei Shuanghuan, Yuanxing Energy, Lantai Industry and other companies also suffered losses in the first quarter.

In order to stabilize the economic operation of the industry, the China Soda ash Industry Association issued a notice on April 13 calling on soda ash production enterprises to reduce production by 30% based on their soda ash production capacity from April 18 to October 18 to reduce inventory Quantity, promote the clearing of excess capacity, and resolve the imbalance between supply and demand.

According to the statistics of the Soda Ash Association, 34 soda ash enterprises have a total annual production capacity of 31.68 million tons. After a 30% reduction in soda ash production, the total soda ash production will be 65,200 tons / day.

"At present, the soda ash market is still in a downturn, and our equipment load has been reduced." On May 15, staff from Shandong Haihua and Sanyou Chemical Securities Department said one after another.

Mid- to long-term market bullish

Regarding the short-term soda market trend, He Weiwen, senior analyst of the Information Department of Guangzhou Chemical Trading Center, believes that soda stock is still at a high level, the downstream market is sluggish, and procurement is not active. Although the operating rate of some soda ash enterprises has decreased, there are still major problems in sales, and the situation of oversupply in the market has not changed. On the whole, short-term soda ash inventory is difficult to digest, and prices are unlikely to rise sharply.

In the medium to long term, the soda ash market is expected to improve. According to statistics, the total national soda ash production capacity is expected to reach 31.52 million tons in 2020. The new production capacity will be 200,000 tons / year in Junhua, Henan, 200,000 tons / year in Jinchang, Gansu, and 100,000 tons / year in Jinghao Salt Industry. New capacity. Overall, the new capacity of the soda industry in the later period is limited.

At the same time, since May, some domestic soda ash manufacturers have lowered their load or shut down for maintenance. According to preliminary statistics, the soda ash manufacturers scheduled to be repaired from May to June involve a production capacity of about 6 million tons, and the supply of soda ash is expected to decrease, which is expected to bring support to the later market rise.

Xie Nan, a chemical industry analyst at Zhongtai Securities, said that soda ash is dominated by flat glass, and about 70% of flat glass is used in the construction field. Recently, some urban real estate industries have begun to pick up, which will inevitably increase the demand for glass and upstream soda ash, which will benefit the soda ash market .