SHANGHAI, Jan 5 (SMM) - According to SMM research, domestic EVA granules output in December stood at 179,000 mt, an increase of 26.02% month-on-month, while the output of photovoltaic-grade EVA granules hit a year-to-date (YTD) low at about 54,500 mt, a month-on-month drop of 7.63%. As of now, most manufacturers have cleared their in-plant stocks, some of which have been shipped to the traders’.
Looking back on the whole year 2022, the total output of EVA granules recorded 1.65 million mt, of which the combined output of PV grade granules was 988,500 mt, with a proportion of 60.01%. The domestic EVA granules capacity has reached 2.09 million mt per year. At present, there are 11 manufacturers that can produce PV grade EVA granules, including Jiangsu Sailland, Ningbo Formosa Plastics, Levima, Zhejiang Petrochemical, Yunlin Energy and Chemical, Yangzi Petrochemical, Sinochem Quanzhou, Zhongke Refinery and Petrochemical, Yanshan Petrochemical, Tianli High-tech, and Yangzi BASF. Among them, except for Zhejiang Petrochemical which produces photovoltaic grade EVA granules only in 2022, other manufacturers flexibly adjusted their production plans according to market demand.
There are two main reasons for the record low production of PV grade EVA granules in December: First, the manufacturers greatly lowered the production of PV grade EVA granules due to high inventory accumulated following robust production and slow consumption in October, and the pessimism over the market in December and January 2023 was also among the causes. Second, the current liquidity of foaming and cable-oriented EVA granules was better than that of PV grade ones (the engagement of traders pushed up the liquidity), and the price has stabilised at a low level. The traders, with a large amount of foaming and cable-oriented EVA granules purchased when prices were high, restocked actively to bring down the average inventory cost when the prices were low. The manufacturers, on the other hand, were also more interested in producing granules with better liquidity to enhance the cash flow at year-end.
Looking back on 2022, the proportion of PV grade EVA granules was below the average level in January, March, September, November and December. January-March is the start-up period of the photovoltaic market, while the second half of the year is the industry’s off-season, while the scheduling of PV grade EVA granules mirrors the manufacturers’ attitude towards the market dynamics. That is, the market was extreme pessimistic in November and December. Under the low production scheduling of PV grade EVA granules in the past two months, the inventory has been effectively brought down. At present, only some traders still hold the stocks of PV grade EVA granules.
As falling price of PV grade EVA granules is likely to boost downstream demand soon, it is expected that the production scheduling of PV grade EVA granules will rise palpably in January compared with December last year, in addition to the low inventory held by the manufacturers. SMM expects the monthly output of PV grade EVA granules to be 109,000 mt in January, up 70-100% MoM.
