Solar PV Industry Drives Demand for EVA/POE Particles: Market Analysis and Price Trends

The solar photovoltaic (PV) industry in China has experienced rapid growth, with the installed capacity reaching 129 GW in the first three quarters of 2023, representing a 145% year-on-year increase. Anticipating the full-year installation for 2023, the PV industry association has revised its forecast from 95 GW-120 GW to 120 GW-140 GW. This indicates that the PV industry has already surpassed the annual installation prediction of the association as of September. Optimistic projections suggest that China's PV installation could reach 210 GW in 2023, reflecting a 140% growth rate.

Growing PV Industry and EVA/POE Particle Demand:
The expanding PV industry has led to a significant increase in demand for ethylene-vinyl acetate (EVA) and polyolefin elastomer (POE) particles, which are key raw materials for PV encapsulation films. While EVA and POE resins find applications in various sectors such as packaging films, foam shoes, automotive, and plastic modification, the PV encapsulation film segment has witnessed the fastest growth and garnered the highest market attention.

According to the "China Chemical New Materials Industry Development Report (2022)," PV encapsulation films have become the largest downstream demand sector for global EVA resin, accounting for approximately 25% of its total consumption. In the domestic market, the demand for PV encapsulation films constitutes an even higher share, reaching 47%.

Regarding POE, currently, around half of the global POE resin is utilized in the automotive sector as a toughening modifier to enhance the impact resistance of internal and external components like dashboards and bumpers. The remaining portion is primarily used in foam shoes, wires, and cables. With the rapid growth in shipments of N-type PV modules, PV encapsulation films are expected to become a significant driving force behind the increased demand for POE in the coming years.

Short-Term Outlook and Price Trends:
November is considered the off-peak season for PV module orders, and the overall production rates of integrated module manufacturers are currently stable. However, a noticeable decline may occur in December, particularly among second and third-tier module factories. Consequently, the demand for encapsulation films is not expected to witness a concentrated surge in the near future.

The current market price of EVA has reached a nearly three-year low, representing the lowest point of the year. Whether the EVA market can rebound will depend on factors such as macroeconomic policies, updates from petrochemical companies, and the follow-up demand from the PV industry.

Price Adjustments and Market Dynamics:
Despite ongoing concerns about demand, several plastic companies have announced price hikes. On November 15, Yunnan Yungui New Materials Co., Ltd. issued a price adjustment notice, stating that due to recent global and domestic developments, including rising costs of raw materials, electricity, logistics, and auxiliary materials, the company has decided to increase the prices of its industrial films (polyester films) by 10% or more, effective from December 1.

On November 8, Sumitomo Bakelite Co., Ltd. announced a price increase for its PVC corrugated board products, with a 15% adjustment to take effect from December 1.

Similarly, Showa Denko K.K. announced a price hike for acetic acid and vinyl acetate sales, with an increase of at least 25 Japanese yen/kg (equivalent to approximately 1201 CNY/ton).

The price adjustments by these companies reflect the impact of geopolitical factors and soaring crude oil prices, which have led to higher costs of certain raw materials. However, the successful implementation of these price hikes remains uncertain due to the uneven growth in demand.

Bullish Trend in Styrene:
Recent market rumors suggested a large-scale maintenance turnaround of a major facility operated by Zhejiang Petrochemical, which sparked market sentiment in the styrene sector. However, the news was subsequently denied, and considering that the current stockpiles of styrene in East China's ports are at historically low levels (only 39,800 tons), styrene futures experienced a significant increase, rising by over 3%.

With the strong performance of styrene and support from the cost side, the ABS market in South China has finally seen a price increase. The specific price adjustments are as follows:
- Chi Mei Corporation (758 market in Taiwan) increased by 120 CNY/ton.
- Dagushan (DG417 market in Tianjin) increased by 100 CNY/ton.
- Jinfaxing (KF730 market in Liaoning) increased by 30 CNY/ton.

The styrene market is expected to undergo a minor destocking phase in November, and if the rumors of maintenance in December are proven false, the destocking trend may continue. In the short term, styrene is expected to demonstrate a relatively strong performance. However, cautious observation is still necessary, consideringthe potential impact of changing market dynamics and geopolitical factors.

The rapid growth of the solar PV industry in China has led to increased demand for EVA and POE particles used in PV encapsulation films. This sector has become the largest downstream demand sector for EVA resin globally. While the off-peak season in November may not witness a concentrated surge in demand, the long-term outlook for EVA and POE particles remains positive due to the continued growth of the PV industry.

The price trends for EVA have reached a low point, and the market outlook will depend on factors such as macroeconomic policies and demand from the PV industry. Several plastic companies have announced price hikes due to rising costs of raw materials, but the successful implementation of these adjustments remains uncertain.

In the styrene sector, recent market rumors and low stockpiles have led to a bullish trend in styrene prices. The ABS market has also seen price increases in South China. However, the market should be cautiously observed, considering potential changes in market dynamics and geopolitical factors.

Overall, the solar PV industry's growth is driving demand for EVA and POE particles, while market conditions and price trends are subject to various factors that could influence future developments.