November EVA production is expected to slightly decrease, with demand remaining stable [SMM Analysis]

PV-grade EVA production in November is expected to decrease by 6.5% MoM. The specific situation is as follows: Three producers are expected to increase PV-grade EVA production in November due to the following reasons: 1. PV prices rebounded; 2. High inventory levels of cable-grade and foaming-grade EVA, with mediocre orders and prices lower than PV-grade EVA; 3. Module production schedules are maintained, and film plant inventories are low. Raw material prices are rising, enhancing purchase willingness for raw materials. Conversely, three producers are expected to decrease PV-grade EVA production in November due to the following reasons: 1. Enterprises are undergoing maintenance; 2. High-pressure low-density polyethylene (LDPE) prices are higher than PV-grade EVA, at 10,500-12,000 yuan/mt, leading enterprises to switch to LDPE production.

Commentary: Due to the mediocre demand for cable-grade and foaming-grade EVA and the continuous rise in PV prices, petrochemical plants plan to reduce the production of cable-grade EVA and increase the production of PV-grade EVA. However, on one hand, most LDPE producers underwent maintenance in H1, coupled with strong demand, causing LDPE prices to remain high this year, leading some EVA producers to switch to LDPE production, thereby tightening the domestic supply of PV-grade EVA. On the other hand, although current PV-grade EVA prices have rebounded, they are still down 21.7% YoY. China has become a low-price area for PV-grade EVA, with imports also down 48% YoY. These factors combined have led to a reduction in spot supply, resulting in shortages. Looking ahead to December, an increase in PV-grade EVA production is expected, while demand is expected to decrease by 10% MoM. However, given the currently extremely low upstream inventory of PV-grade EVA, even though there may be an increase in inventory in December, the overall inventory pressure is expected to be small, thus market prices are likely to remain stable.