Module production schedule in January dropped 20% MoM. Why is the EVA market still so hot? [SMM Analysis]

This Week: In the PV-grade EVA market, transaction prices for PV-grade EVA remained in the range of 10,400-10,700 yuan/mt. January's production schedule for PV-grade EVA is approximately 100,000 mt. Pre-holiday stockpiling demand was robust, with active order signing this week. The spot market for EVA was tight, and the transaction center shifted upward.

In January, module production decreased by 20% MoM. Why is the EVA market still so active?

After the holiday, logistics are expected to be affected, prompting module and film producers to stockpile, leading to a significant increase in EVA demand.

Stockpiling Demand from Module Producers: Although actual module production decreased by 20% MoM, the increase in stockpiling demand resulted in actual order volumes exceeding actual production. Due to the constant temperature and humidity storage requirements for films and the high risks associated with stockpiling, module producers typically maintain film inventory for about one week. Affected by the Chinese New Year holiday, module producers generally stockpile for about five days. Based on a monthly production of 30 GW, this requires an additional 5 GW of film reserves, equivalent to an additional 14,000 mt of PV-grade EVA resin production by film producers in January.

Stockpiling Demand from Film Producers: Similar to module producers, film producers also anticipate additional stockpiling demand. Since mid-2024, film producers have reduced raw material inventory cycles to increase cash flow and minimize losses from raw material price declines, resulting in overall low inventory levels. Coupled with market expectations of post-holiday price increases, film producers generally stockpile for 3-5 days, with EVA stockpiling demand approaching 10,000 mt.

Currently, petrochemical plant inventories are low. Due to significant pre-holiday stockpiling, the spot market is experiencing undersupply, and some petrochemical plants have already sold out their February production. Looking ahead to after the holiday, supply is expected to increase, with domestic regular production reaching 105,000 mt. Module production is expected to continue declining by 2-3 GW, which may lead to inventory accumulation in the EVA market. However, with low spot inventory and a slow post-holiday resumption process, market inventory growth is expected to be limited, keeping overall inventory manageable. Meanwhile, as the foaming peak season begins, non-PV demand is expected to exceed 120,000 mt, maintaining balance in the EVA market. Prices are likely to stabilize, but attention should be paid to the specific capacity arrangements of each producer.