Metallurgy / Chemicals / Rubber & Plastics

Soda ash is an important basic chemical product and is known as the "mother of chemical industry". In the futures market this week, soda ash futures continue to hit record highs. As of the close of the afternoon of August 13, the main soda ash contract closed at 2732 yuan/ton, and the highest intraday hit 2667 yuan/ton, setting a new high since the listing of this variety.

In the spot market, the price of soda ash is constantly setting new records. Data from Longzhong Information shows that this week, the price of heavy soda ash in East China has exceeded 2,400 yuan/ton, setting a record high. The price of soda ash in North China, Central China, and Southwest China has also set a new high in nearly 10 years.

During this period, the A-share soda ash sector also continued to strengthen. The Wind soda ash industry index rose 14% this week, and the leading soda ash stock Yuanxing Energy rose more than 16% this week.

Soda ash production cut in August exceeded expectations

Disturbance on the supply side is an important reason for the rapid increase in the price of soda ash this time.

The reporter learned that due to summer maintenance and shutdown, superimposed on the impact of sudden power cuts, epidemic prevention and control and other factors, the domestic soda ash production has been reduced more than expected since August, and the supply of soda ash in many regions is tight.

According to Yuan Ran, a senior researcher at Guotai Junan Futures Energy and Chemical, summer is the traditional peak season for maintenance in the soda ash industry. In July, the start-up load of manufacturers dropped significantly, and the number of maintenance companies in the middle of the year continued to increase, and the company's inventory was further consumed. Since August, although the number of manufacturers scheduled for maintenance has decreased, in early August, Henan soda ash enterprises have successively received power-cutting requirements, and the factory operation has dropped to 50%, and the daily output has been reduced by about 2,000 tons. The supply of goods has continued to be tight, and most companies have not reported the seal.

This week, the domestic soda ash industry's operating load situation is still not optimistic. Wind data shows that as of August 12, the operating rate of soda ash manufacturers nationwide was 71.67%, a decrease of about 6 percentage points from the same period last week.

Baichuang Yingfu said that in the later period, Hangzhou Longshan, Hubei Shuanghuan, and Zhongyan Inner Mongolia will gradually resume production. Tianjin Bohua, Qinghai Development Investment and other companies have maintenance plans, but the overall industry load is still not high, and the market supply continues to be tight. .

The tight supply of soda ash is also evident in the inventory data. Longzhong Information data show that as of this week, the national soda ash inventory was 345,200 tons, a month-on-month decrease of 30%.

In addition to maintenance and power rationing, emergencies such as public health incidents have also caused poor logistics in some areas, exacerbating the shortage of soda ash. For example, major soda ash producing areas such as Jiangsu and Henan have limited outbound shipments due to logistics constraints.

The downstream consumption of soda ash is concentrated in flat glass. Generally speaking, in the cost of glass production, soda ash accounts for about one-third, and each ton of flat glass needs to consume 0.2 tons of heavy soda ash.

At present, benefiting from the completion cycle of the real estate and the high profits of the industry, the downstream glass industry of soda ash is very prosperous. Wind data shows that as of last week, the daily melting volume of float glass was 175,300 tons, and the actual production capacity reached the highest level of this century. .

Yuan Ran said that the actual production capacity of glass will be further expanded in the second half of the year. A total of 14 float glass will be ignited, involving a daily melting volume of more than 11,000 tons. Photovoltaic glass is not subject to the restriction of capacity replacement, and its commissioning in the second half of the year involves a daily melting volume of up to 12,000 tons.

"The expansion of photovoltaic production and the resumption of float production are the biggest drivers of soda ash this year, and the price trend of soda ash will continue to rise." Yuan Ran said.

The phenomenon of turning losses into profits in the industry is widespread, and leading companies are basically full of production and sales

Yuanxing Energy is a leading domestic trona company. Its semi-annual report shows that the operating income created by the baking soda and soda ash business accounts for 30% of the total revenue, making it the company's largest business.

In the first half of the year, the company achieved a net profit of 1.255 billion yuan attributable to its parent, which turned losses into profits over the same period last year, with a year-on-year increase of 1721%. Regarding the substantial increase in profitability, the company said that coal prices are operating at a high level, and the average market prices of soda ash, urea and methanol have increased significantly compared with the same period last year.

According to Yuanxing Energy, the company's annual production capacity of soda ash products is 1.8 million tons, and the cost advantage of soda ash products is obvious. At present, the company's soda ash plant is operating at full capacity. Soda ash market demand and prices are on the rise, and it is expected that the demand for photovoltaic glass will have a certain pulling effect on the soda ash market in the future.

Shandong Haihua turned losses into profits in the first half of the year, and its net profit attributable to its parent reached 252 million yuan, an increase of 288% over the same period last year. The company said that in the first half of the year, as the downstream industry's prosperity rebounded, the company's leading product soda ash market demand increased, and both sales volume and selling price increased significantly compared with the same period last year.

In addition, a number of soda ash companies are expected to have good results in the first half of the year. Sanyou Chemical is expected to achieve a net profit of 1.15 billion yuan to 1.2 billion yuan in the first half of the year, and it will also turn losses into profits.

Sanyou Chemical stated on the investor interactive platform on August 9 that the company's annual production capacity of soda ash is 3.4 million tons, which is produced by the soda ash branch and its holding subsidiary, Qinghai Wucai Soda Industry. The current production and operation are stable, with sufficient orders and almost full production and sales. .

Guosen Securities believes that the demand for soda ash is being continuously driven by the demand for float glass and photovoltaic glass, and there is less production capacity on the supply side in the short and medium cycle, thus forming a medium and long-term mismatch of supply and demand. In the next two years, the supply and demand pattern of soda ash will gradually improve, and it is expected to enter a boom cycle.