Real estate demand for good superposition photovoltaic glass has been put into production, optimistic about the annual soda ash price upward

First, steady growth

1.1 The demand for real estate is good and photovoltaic glass is put into production successively, and the price of soda ash is optimistic about the rise of the year

1.1.1 Under the background of steady growth, the repair of real estate supply and demand is expected to accelerate

The pressure on economic development will further strengthen the expectation of loosening real estate policy. Since entering 2022, China's macroeconomic downward pressure has gradually emerged, and the triple pressure of demand contraction, supply shock and expected weakening interact. In the context of the current adherence to the policy of zero eradication of the epidemic, the subsequent pressure on domestic economic growth has increased, because the demand for epidemic prevention and control may be replaced by a more robust policy stimulus.

At present, there is a multi-point spread of the epidemic across the country, and the number of new cases in Jilin and Shanghai continues to increase. According to the data of the National Health Commission, from March 1 to May 8, 107,000 new confirmed cases and 643,000 new asymptomatic infections were diagnosed nationwide. The rebound of the epidemic has increased the risk of industrial supply chain stability, and the prosperity of the manufacturing and service industries has significantly weakened, and the short-term economic downward pressure has increased. China's manufacturing PMI was 47.4 in April, down 2.1 percentage points from the previous month; Caixin's China services PMI fell to 36, down 6 percentage points from the previous month and the lowest since March 2020. The spread of the impact of the epidemic and the pressure on economic development may further strengthen the expectation of loosening the real estate policy.

Under the background of steady growth, the repair of real estate supply and demand is expected to accelerate. The real estate industry is large in scale, long in chain and wide in scope, and plays a decisive role in the national economy. In 2021, the added value of China's real estate industry accounted for nearly 7% of GDP, and its own and related industrial chains contributed nearly 30% to GDP, so the key to stabilizing the economy is to stabilize the real estate. According to the National Bureau of Statistics, from January to March 2022, the total domestic new construction area of 298 million square meters, year-on-year -17.5%; The total completed area is 169 million square meters, -11.5% year-on-year. With the subsequent alleviation of the epidemic and the recovery of the construction progress, the growth rate of new starts and completion is expected to be gradually repaired at the current bottom.

In the context of stable economy and steady growth, many places in the country have introduced relaxation policies on the real estate market due to urban policies, on the one hand, restore market confidence, encourage just need groups and reasonable improvement of demand groups to buy homes, relax the purchase restriction policy, reduce the down payment ratio and lower mortgage interest rates and other measures to restore the smooth operation of the market; On the other hand, improve the financing environment of domestic housing enterprises, and the liquidity pressure of housing enterprises has been gradually alleviated. Under the goal of stabilizing land prices, stabilizing housing prices and stabilizing expectations, it is expected that the policy repair at both ends of supply and demand in the real estate industry is expected to accelerate.

1.1.2 Soda ash prices are expected to continue to rise under tight supply balance

The downstream of soda ash in China is mainly real estate and photovoltaic glass, and domestic consumption continues to increase. According to BaichuanWeifu, the total production capacity of soda ash in China in 2021 is about 34.36 million tons/year, of which 16.96 million tons are produced by the combined alkali process, 15.6 million tons are produced by the ammonia-alkali process, and 1.8 million tons are produced by trona. In the main downstream demand structure of soda ash in China, the demand for flat glass (mainly used for real estate construction and automobiles) accounted for 47%, the demand for daily glass (mainly used for packaging materials) accounted for 17%, and the demand for photovoltaic glass (mainly used for photovoltaic modules) accounted for about 8%.

Real estate recovery is expected to bring incremental upward demand for soda ash. In 21 years, the completed area of domestic real estate is about 1.014 billion square meters, of which residential buildings account for 72%, corresponding to the demand for soda ash is about 12.35 million tons. In the case of continuous force of the subsequent real estate policy, with the gradual improvement of the financial side of housing enterprises, the completed area previously affected by the epidemic will be gradually released in H2, and we expect that the completed area is expected to maintain year-on-year growth in this year. Assume that the proportion of residential buildings in the completed area remains 72%, and the glass yield remains unchanged at 85% : under the optimistic scenario, if the completed area remains 10% increased, the demand for soda ash in 22 years will reach 14.33 million tons, an increase of nearly 2 million tons; In the neutral case, the completed area maintains a 5% growth, and the demand for soda ash in 22 years can reach 13.68 million tons, an increase of nearly 1.33 million tons. Real estate recovery will drive the incremental demand for soda ash to continue to rise.