Look for investment opportunities from the perspective of chemical industry trends

Domestic carbon fiber high-end import substitution prospects are broad. On the other hand, as domestic enterprises continue to increase investment in the field of carbon fiber, research and development production strength has been greatly improved. At present, in terms of product categories, Guangwei Composite, Zhongfu Shenying, Zhongjian Technology and other enterprises have realized the industrialization of T300/T700 grade carbon fiber products, and successfully applied to the aerospace field. In addition, the key production technology of high-strength and high-model carbon fiber M50J has also been breakthrough. In terms of large tow, the 12,000 tons/year large tow carbon fiber production project created by Jinggong Group and Jilin Chemical Fiber was also completed and put into operation last year, and its large tow carbon fiber production capacity reached 2000 tons/year, successfully filling the blank situation of domestic large tow carbon fiber. In the field of composite materials application, domestic carbon fiber has also successfully entered the aerospace field in recent years, with the successful test flight of domestic large aircraft C919, the future of domestic carbon fiber used in high-end areas is expected to gradually break the foreign monopoly situation.

Considering that the global installed scale of wind power is still expanding, the future demand for carbon fiber for domestic wind power blades will continue to maintain rapid growth. Carbon fiber in the military industry is also continuously achieving import substitution, we believe that with the development of the general trend of the industry, the domestic carbon fiber industry leading growth opportunities.

1.2. The installed capacity of the photovoltaic industry is developing rapidly and continues to drive the demand for soda ash

Soda ash industry prosperity is high, photovoltaic glass will become the core increase of soda ash demand in the future. Soda ash can be divided into light soda ash and heavy soda ash, heavy soda ash is mostly used in float glass, photovoltaic glass and other glass manufacturing. Light soda ash downstream covers metallurgy, printing and dyeing, leather, daily chemical and food and other fields, the application is more dispersed. In terms of production capacity and output, according to Zhuo Chuang consulting data, as of the end of 2020, China's soda ash production capacity of 33.17 million tons, the output of 27.95 million tons, the industry operating rate in the past five years remained in the 83% to 90% range, the industry boom degree is high. In terms of the downstream application of soda ash, according to statistics, the current domestic soda ash downstream consumption structure float glass accounts for about 40%, glass packaging containers account for 12%, and photovoltaic glass accounts for 6%. We believe that with the release of photovoltaic glass production capacity constraints, the rapid development of photovoltaic industry installed capacity in the future, photovoltaic glass will be constructed to drive the core increment of soda ash demand.

It is conservatively predicted that in 2025, China's new photovoltaic installed capacity will pull the annual demand for soda ash exceeding one million tons. In 2020, China's new photovoltaic installed capacity of 48.2GW, an increase of 59%, the cumulative photovoltaic installed capacity of 253GW, China's new photovoltaic installed capacity for 8 consecutive years ranked first in the world, cumulative installed capacity for 6 consecutive years ranked first in the world. According to the forecast data of China Photovoltaic Industry Association, it is conservatively predicted that China's photovoltaic installed capacity in 2021-2025 is 55GW, 60GW, 70GW, 80GW and 90GW, according to each 1GW photovoltaic module corresponding to about 6.6 million square meters of photovoltaic glass. Each square meter of photovoltaic glass weighs about 10kg and each ton of glass produced about 0.2 tons of soda ash consumption is converted. From 2021 to 2025, China's new photovoltaic installed capacity is expected to drive soda ash demand of 726,000 tons, 792,000 tons, 924,000 tons, 1.056 million tons and 1.188 million tons, respectively.

Under the background of "new energy +", the backward production capacity of soda ash is expected to accelerate the clearance, and the future new production capacity will mainly be based on natural alkali method. From the point of view of production process, the main production process of soda ash is divided into three kinds: ammonia alkali method, joint alkali method and natural alkali method, and the capacity of the above three kinds of processes in China is about 50%, 45% and 5% respectively. Among the three alkali making processes, the ammonia-alkali process has greater environmental pollution, consumes a lot of natural resources, the utilization rate of raw salt is low, the by-product calcium chloride is less useful, and most of it is treated as waste residue.

Compared with the ammonia-alkali method, the combined alkali method has less pollution, higher utilization rate of raw salt, and matches with the synthetic ammonia industry. The by-product ammonium chloride can be used as the raw material for the production of compound fertilizer, but the sodium carbonate products produced by the combined alkali method are less salty and granular than ammonia alkali, which is difficult to quality control, and the mother liquor of ammonium chloride is more corrosive to equipment. Natural alkali method not only has less pollution to the environment, but also has obvious cost advantages compared with the other two methods, according to GenesisEnergy, the cost ratio of natural alkali method, ammonia alkali method and combined alkali method is about 1:1.8:2.3. We believe that under the background of "new energy +", China's requirements for carbon emissions and environmental protection control are becoming increasingly strict, and the ammonia-alkali method, which occupies half of the domestic production capacity, will be gradually withdrawn, while the new soda ash production capacity will be mainly based on the trona process.