PC Enters The Era of 'Post-Expansion', And The Trend of Integration Is Increasing

In 2014 and before, China's PC production capacity was severely insufficient, and the domestic market was highly dependent on imports. After the first domestic PC device, Zhejiang Railway Dafeng, went into production in 2015, it opened a new era of China's PC localization process.

In the next few years, several domestic PC devices have been put into production. Among them, the production capacity in 2018 increased significantly, which became the first year of the concentrated release of domestic PCs. As of the end of December 2021, China’s PC capacity expansion cycle has continued for 4 years, and most of the previously announced production capacity has also been settled or put into production soon. Starting from 2022, China’s new PC capacity will be significantly reduced, and the industry will gradually enter and expand capacity. era.

As of the end of 2021, there were 14 domestic PC manufacturers with a total production capacity of 2.47 million tons/year, an increase of 8 from 2017, with a capacity increase of 182.3%. The average annual growth rate of production capacity from 2017 to 2021 is 23%, of which 2021 The domestic new PC production capacity is expected to reach 620,000 tons/year, a year-on-year increase of 33.51%, which is the peak of capacity expansion in recent years.

With the continuous expansion of PC production capacity, the domestic market supply tends to be loose, and the import dependence has decreased significantly. It is expected that the domestic PC import dependence will drop to around 62% in 2021, a drop of more than 30% from 2014; at the same time, The profit level of the domestic PC industry has also shrunk rapidly. In 2021, the average loss of the domestic PC industry is more than 100 CNY/ton. The operating environment of the industry continues to deteriorate compared with previous years, and the capacity utilization rate is seriously insufficient.

Looking at the next few years, the expansion of the domestic PC industry will gradually slow down, but the trend of industrial chain integration will develop significantly.

According to research, China’s PC industry capacity expansion will gradually slow down in the next five years, and the planned production capacity under construction is only 1.56 million tons per year. It is estimated that by 2026, with the completion of China’s PC capacity expansion, the total domestic production capacity will reach 4.03 million. Ton/year, an increase of 63.16% compared to 2021. The average annual growth rate of domestic PC production capacity from 2022 to 2026 is 13%, and the growth rate has slowed down significantly.

In the future, with the gradual slowdown of domestic PC capacity expansion, original and future new companies have extended the industrial chain, and the proportion of domestic PC devices in the industrial chain will continue to increase.

As of the end of 2021, there were 14 domestic PC manufacturers with a total production capacity of 2.47 million tons/year, involving 9 industrial chain supporting devices, with a total production capacity of 1.77 million tons/year, accounting for 71.66%, of which 2 foreign brands were independently supporting Downstream, the remaining 6 are supporting raw materials or downstream devices. Compared with overseas manufacturers, the proportion of domestic PC companies supporting the industrial chain is at a relatively low level.

It is estimated that by the end of 2026, there will be 19 domestic PC manufacturers, including 17 supporting enterprises in the industrial chain, with a total production capacity of 3.83 million tons per year, accounting for more than 95% of the total production capacity. The supporting ratio of the industrial chain will be higher than that in 2021. Significantly improved.

In the future, the proportion of China’s PC industry chain will increase significantly, and the trend of industry integration is obvious. Manufacturers can make full use of the advantages of the industry chain and independently deploy the production and sales of upstream and downstream products according to the industry and market operating conditions, effectively helping companies to gain in the fierce competition. The initiative will also effectively gain the cost advantage in future exports to overseas markets, thereby increasing the competitiveness of overseas production companies.