1.2.2 PVC demand is relatively stable supported by real estate, and calcium carbide gives strong support to the cost end
From the supply side, according to Baichuan Yingfu statistics, the effective production capacity of domestic PVC in 2021 is 25.9 million tons, the same as in 2020. It is expected that domestic PVC production capacity will increase by about 2.8 million tons in 2022, and will increase by about 800,000 tons in 2023. From the demand side, under the pull of the completion of the real estate industry, the demand for PVC downstream construction pipes and other products is strong. Historically, the completed area of real estate can be used as an indicator of the prosperity of the PVC industry, which is usually synchronized with the PVC price boom or 0.5-1 years ahead. According to the data of the National Bureau of Statistics, the completed area of domestic real estate in 2021 will reach 1.014 billion square meters, +11.8% year-on-year; As of March 2022, the total completed area of domestic real estate is 169 million square meters, which is -11.5% year-on-year. The completed investment in real estate development, which is a leading indicator of real estate completed area, will be +15.0% at the end of June 2021 and +4.4% at the end of December 2021, respectively. Overall, PVC downstream demand is relatively stable supported by real estate. From the cost side, the price of PVC is basically the same as the price trend of upstream raw materials calcium carbide, if the price of calcium carbide rises rapidly, the cost gap between the enterprises that bring calcium carbide into PVC production and the enterprises that purchase calcium carbide is huge, and the profit gap is significantly increased. The high and stable calcium carbide prices brought about by the tension of calcium carbide supply and demand structure will give PVC strong cost support.
1.2.3 The growth of caustic soda production capacity is stable, and the competition pattern is continuously optimized
Since 2016, the domestic caustic soda market has continued to rise, corporate profitability has improved, and a number of reform policies for the supply side have been introduced, smaller and backward production capacity has continued to withdraw, industry barriers have increased, competition has improved, and the overall production capacity has entered a stage of stable development with low growth. According to the statistics of the China Chlor-alkali Network, by the end of 2020, there were 158 caustic soda production enterprises in China, with a total capacity of 44.7 million tons of caustic soda, a net increase of 900,000 tons compared with 2019. According to Baichuan Yingfu data, the domestic caustic soda has a new capacity expansion plan of about 2.51 million tons in 2021, but the actual effective capacity growth is only 950,000 tons; About 710,000 tons of new capacity are currently planned for 2022. In 2021, the capacity utilization rate of caustic soda was 84.3%, steadily increasing year by year. In recent years, with the promotion of the national supply-side reform, the implementation of environmental protection policies and the introduction of a series of industrial policies, the layout of the chlor-alkali industry has been fully adjusted. At present, China has formed some large-scale and large-scale chlor-alkali production enterprises, and the industry concentration continues to increase, and the future industry competition pattern will achieve continuous optimization.
The recovery of the completed area of the real estate industry promotes the demand for electrolytic aluminum and alumina, and the expansion of alumina production accelerates the mismatch of caustic soda supply and demand. Alumina is the largest proportion of caustic soda consumption downstream, accounting for about 30%-35% of caustic soda downstream. 95% of the downstream alumina is used in the electrolytic aluminum industry, and then widely used in construction real estate, transportation, electronic appliances, mechanical equipment and other fields. At present, China is the world's largest alumina producer and consumer, accounting for more than 50% of the world's alumina production in recent years. From the supply side, since the supply-side reform of the industry in 2015, the state has issued a series of environmental protection and production limit policies for the electrolytic aluminum and alumina industries, and strictly controlled the growth of electrolytic aluminum production capacity, resulting in a slowdown in the growth of electrolytic aluminum and alumina production capacity and output. Under a series of supply-side reforms, domestic electrolytic aluminum 2015-2020 capacity expansion CAGR=5.0%, and the industry capacity utilization rate is about 85%. In 2021, alumina is driven by the boom of downstream traditional industries such as real estate, and the demand for aluminum products in emerging industries such as high-end equipment manufacturing and aerospace is increasing, and the expansion has a significant acceleration trend. In the first half of 2021, the industry put into operation a total of 1.4 million tons of capacity, and the annual new alumina production capacity was about 6.5 million tons; About 10 million tonnes of production capacity will still come on stream in 2022. Accordingly, it is estimated that alumina production capacity in 2021 and 2022 will increase by 7.4% and 10.6%, respectively, and then it is expected that the growth rate of production capacity will slow to 2-3%. Compared with the rapid expansion of alumina, the expansion rhythm of caustic soda is significantly lower than the capacity growth of aluminum oxide, and it is expected that the annual growth of caustic soda capacity in 2021-2023 is only about 2%, so the supply and demand mismatch pattern of caustic soda will be relatively tight in the medium term.
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