The Strong Demand for Photovoltaics Drives the Profitability of EVA Companies to Improve

In the context of the rapid growth of the photovoltaic industry, the market demand for EVA (ethylene-vinyl acetate copolymer) resin, especially high-end photovoltaic materials, is strong. In addition, the port congestion caused by the epidemic has hindered the import of EVA. Since the beginning of this year, the supply and demand pattern of the EVA market has been tight. Product prices are soaring, rising again and again.

Since May, EVA has maintained its kingly demeanor in the rubber and plastics market, and its price has skyrocketed. On May 5, the auction price of Sinochem Quanzhou EVA once again exceeded 30,000 CNY/ton. On May 6, the EVA market in South China rose explosively, with multiple brands increasing by as much as 1,000 CNY/ton in a single day. In the East China market, EVA/Singapore TPC/KA31 hit a single-day increase of 3,000 CNY/ton.

Regarding the follow-up trend and profitability of the EVA market, industry insiders said that at present, major domestic EVA manufacturers have full orders. Under the strong leadership of photovoltaic demand, it is expected that the tight supply and demand situation of the EVA market will continue during the year, and the price of raw materials will be stable and falling. Under the circumstance, the profitability of EVA enterprises will also improve.

Photovoltaic demand growth is the main driving force

EVA resin is a general-purpose polymer. China's EVA is mainly used in functional shed films, packaging films, shoe materials, hot melt adhesives, wires and cables, and solar photovoltaics. With the adjustment of the domestic industrial structure, the EVA industry has shown differentiated development.

Foamed shoe materials and films belong to the traditional application fields of EVA resin, the demand is close to saturation, and the proportion of consumption has shrunk. At the same time, with the development of China's photovoltaic industry, pre-coating technology and halogen-free flame retardant cables, solar cells, coating, wire and cable have become important application areas of EVA resin, and the demand has grown steadily.

Since the beginning of this year, the photovoltaic industry has ushered in a strong rebound. Statistics from the National Energy Administration show that as of the end of March, the installed capacity of solar power generation nationwide was about 320 million kilowatts, a year-on-year increase of 22.9%; 147.80%.

In photovoltaic modules, EVA film is used between the tempered glass plate and the solar cell to encapsulate and protect the cell. At present, photovoltaic film accounts for about 40% of the downstream application of EVA resin in my country, which is the largest downstream application of EVA resin.

At present, my country's photovoltaic industry occupies a dominant position in the world, but one of its key materials, EVA photovoltaic film material, has always been a "stuck neck" link that relies on imports, and the import dependence is as high as 65%. The supply is in short supply.

At present, domestic EVA products are mainly based on low-end materials. Insufficient supply has caused the price of high-end EVA to rise again and again. "In Shandong, the price of high-end EVA products rose by more than 40% from January to April this year." Industry insiders said.

According to statistics, in the list of commodity prices in April, there were 5 kinds of commodities in the rubber and plastics sector that increased month-on-month. Among them, the only commodity that increased by more than 5% was EVA, which increased by 10.67%, accounting for 4.5% of the monitored commodities in this sector. . Since May, EVA has maintained a strong upward trend.

Good market outlook supports corporate profits

At present, only a few domestic companies such as Lianhong Xinke, Dongfang Shenghong, and Rongsheng Petrochemical can produce photovoltaic grade EVA resin. At present, the overall operating rate of domestic EVA is at a high level of about 90%, and the production of photovoltaic materials is mainly used, but the product supply is still in short supply. Driven by the strong demand for photovoltaics, the domestic EVA resin supply and demand pattern continues to be tight. It is expected that the tight supply and demand situation in the E-VA market will continue in the second quarter. With the steady decline in raw material prices, the company's profitability will continue to improve.

It is understood that the production of photovoltaic-grade EVA materials must cross the "three mountains", that is, high VA content, high melting index, and high operational difficulty. Other performance indicators include crystal point, density, melting point, tensile strength, volume resistivity, etc. Photovoltaic EVA products have the characteristics of high light transmittance, UV resistance, and anti-humidity and heat yellowing, which directly determine the product quality and service life of photovoltaic modules.

At present, the demand for photovoltaics at home and abroad is growing rapidly at the same time, and it is expected that the EVA market will continue to be in short supply this year. With the continuous advancement of "carbon neutrality", the demand for high-end EVA in the fields of photovoltaic film and wire and cable still has significant growth space, and the high growth track of EVA resin demand is clear. Due to the high technical threshold of high-end EVA production, the market supply and demand will still be tight in the next five years, and the EVA profit guarantee is strong.

Technological transformation and capacity expansion help the market grow steadily

From January to October 2021, the apparent consumption of EVA in China is around 1.7 million tons, an increase of 170,000 tons over the same period in 2020, or an increase of 11.1%. Among them, domestic production was 810,000 tons, a year-on-year increase of 32.8%; imports totaled 938,200 tons, a year-on-year decrease of 2.5%. The current proportion of imported products is 55%, down 9% from the same period last year.

As an important auxiliary material of photovoltaic modules, EVA accounts for about 12% of the cost of photovoltaic modules. In response to the shortage of supply in the market, EVA production capacity is gradually increasing. However, it is worth noting that due to the long project construction cycle and high operational technical barriers, the growth rate of EVA, especially photovoltaic material production capacity, is still difficult to meet market demand.

China Industry News has learned that the recent new production capacity of domestic EVA photovoltaic materials mainly comes from Lianhong Xinke and Zhongke Zhanjiang. When interacting with investors, Lianhong Xinke also mentioned that the production capacity has been increased after the completion of the device transformation. At present, all the devices are running at full capacity, with full orders and full production and full sales.

Industry insiders said that the demand for photovoltaics is strong, and there is a lack of new domestic production capacity support in the short term. If the import continues to be tight, the subsequent EVA price will not fall. At present, domestic enterprises are actively completing technology digestion and process precipitation. It is expected that during the "14th Five-Year Plan" period, there will still be a large gap in high-end EVA products.