【Haichuan Chemical Salary News】The price of resin paste rose by over 35% on a year-on-year basis in the first quarter, and Xinjiang Tianye’s key products were produced in larger quantities than expected

In the first quarter of this year, Xinjiang Tianye achieved operating revenue of 840 million yuan and a net profit of 23.19 million yuan. It is reported that the trend toward higher-end development, a greater variety of products, and differentiation in the PVC industry is becoming increasingly evident, with paste resins having become an important product in this industry. Currently, the main downstream applications of paste resins are synthetic leather and gloves, and these areas of use are continuing to expand. Thanks to this stable demand, the supply and demand balance for paste resins remains steady, resulting in strong profitability for these products. During that quarter, the average selling price of Xinjiang Tianye’s specialty PVC products also increased by 4.01%. Although the production volume of these specialty PVC products remained stable, sales declined on a year-on-year basis due to the impact of the pandemic.

Xinjiang Tianye currently has an annual production capacity of 200,000 tons of specialty PVC (including 100,000 tons of paste resin), while Tieneng Chemical’s capacity for regular PVC is 450,000 tons per year; the acquisition will **increase the company’s production capacity. It is understood that Tianye Group, the controlling shareholder of Xinjiang Tianye, has made breakthrough progress in advancing PVC modification technologies; in the future, the synergistic advantages between Xinjiang Tianye and Tianye Group will become even more evident. In 2019, the global consumption of PVC reached 47 million tons. Projections indicate that demand for PVC is on the rise, with a compound annual growth rate of 3.3% over the next 6 years. The main areas of consumption include pipes, profiles, films, wires and cables, as well as floor coverings. Among them, the demand growth in emerging markets such as India and Vietnam is even stronger. It is also reported that the 600,000-ton-per-year ethylene glycol project, part of the first phase of the 1 million tons per year synthetic gas-based low-carbon alcohol production facility developed in collaboration between Xinjiang Tianye and Tianye Group, is another topic of interest in the capital market. Xinjiang Tianye stated that at present, the design work for this project, as well as the ordering of equipment and civil construction, have been completed. The installation work is nearing completion; the core units and sections are undergoing individual testing, while the auxiliary units are being tested in a combined manner. Xinjiang Tianye stated that the funding for the construction of the ethylene glycol project is being allocated as planned. However, due to the impact of the novel coronavirus, the commissioning of the project was delayed in the first quarter of this year. As of now, work has resumed on a full scale, with efforts being made to start operations as soon as possible in order to foster an industrial structure characterized by diversified development and multiple sources of support. On April 30, the company’s quarterly report for 2020 was released, showing that during the first quarter, the average selling price of Xinjiang Tianye’s main product, paste resin, was 7,200 yuan per ton – a 35.39% increase compared to the same period in 2019. This increase was much higher than that of the company’s other main products. Additionally, its subsidiary Tianwei Chemical achieved production levels that exceeded expectations; the output of paste resins reached 28,500 tons, an increase of 1,300 tons compared to the previous year. Although sales volume declined slightly, the company still managed to record an income increase of 33.08 million yuan.

Recently, the Xinjiang Famous Brand Strategy Promotion Committee issued a notice announcing the list of Xinjiang’s famous brand products. The \"Tianye\" brand calcium carbide produced by Xinjiang Tianye (Group) Co., Ltd., the \"Tianye\" brand 1,4-butanediol manufactured by Xinjiang Tianzhi Chenye Chemical Co., Ltd., the \"Yaxi\" brand polyvinyl chloride paste resin produced by Tianwei Chemical Co., Ltd., and the \"Tianye\" brand plastic woven bags manufactured by Jiamei Packaging Branch of Xinjiang Tianye Co., Ltd. were recognized as Xinjiang’s famous brand products for 2017.

Company Overview: Xinjiang Tianye (Group) Co., Ltd. was established in July 1996; it is a large state-owned enterprise belonging to the 8th Agricultural Division of the Xinjiang Production and Construction Corps. Xinjiang Tianye Co., Ltd., which is controlled by the group, was listed on the Shanghai Stock Exchange in June 1997, while Xinjiang Tianye Water-saving Irrigation Co., Ltd. was successfully listed in ** in February 2006. The industries under the group cover a wide range of fields including plastic products, water-saving equipment, chemicals, calcium carbide, food, thermoelectric power, mining, building materials, cement, logistics and trade, as well as construction and real estate. By the end of 2017, the company’s total assets amounted to 40 billion yuan, its main business revenue was 27.3 billion yuan, and it generated 3.3 billion yuan in profits and taxes. All its operational indicators have been increasing at a rate of around 40% for several consecutive years. Polyvinyl chloride, caustic soda, calcium carbide, water-saving equipment, plastic processing, and the production of cement from calcium carbide slag using the new dry process are all among the best in the country. It has ranked among the top 500 manufacturing companies in the country for consecutive years, and holds the first place in the national chlor-alkali industry.

Since May, the quotes offered by domestic PVC paste resin manufacturers have continued to decline steadily, while actual sales transactions have remained more flexible. The supply and demand dynamics in the market remain unbalanced. On the supply side, since PVC paste resins still generate profits at present, companies continue to operate at roughly the same level. Inventory levels vary among different grades, with some grades still having high inventory levels. Companies are cautious, and in order to reduce inventory pressure, transactions are carried out on a flexible basis based on actual orders. From the demand side, the manufacturing companies that use glove materials are operating at a high level, thanks to the large number of export orders; these companies maintain high production volumes, focusing on fulfilling existing orders. However, due to an ample supply of glove materials, some downstream manufacturers remain cautious about future market conditions, which results in moderate purchasing enthusiasm. Demand is primarily driven by essential needs, and stockpiling levels have declined ； It is expected that the production activity of downstream users of these bulk materials will improve compared to before, but some of the enterprises that use these materials in their products face weak export orders; only domestic sales can provide support, so the demand for these bulk materials remains limited. There is still an excess supply of certain grades of these bulk materials. As of this week, the average price for PVC paste resin in the East China region is 6,600–7,800 yuan per ton, while in the North China region the average price for glove-grade material is 8,000–8,500 yuan per ton; there are also some offers at lower prices. However, looking at price trends, the downward momentum of prices slowed down this week; prices in the main range remained relatively stable at lower levels, while some higher-priced items saw a decline. 　　Looking at the second half of May, there are still some positive factors supporting the market; an analysis will be provided below from the perspectives of raw materials as well as supply and demand. 　　Raw material calcium carbide: Power supply has been restored to some of the calcium carbide furnaces that were shut down earlier this week; output is expected to resume next week. The calcium carbide furnaces that are not operating properly are also likely to return to normal operation, resulting in an increase in the supply of calcium carbide ； On the demand side, although PVC manufacturers planning maintenance intend to resume operations, it is expected that this will not have a significant impact on the calcium carbide market. It is expected that some ex-plant prices will remain stable at high levels next week ； Downstream parties are mainly waiting to see the impact of PVC maintenance work; if the improvement in supply remains limited, overall purchase prices could see a slight increase. 　　Supply side: As shown in the table below, Jining BOC, Xinjiang Zhongtai, and Xinjiang Tianye all have maintenance plans in May, involving a production capacity of 170,000 tons per year, which provides some positive support for the market. However, given the significant inventory pressures faced by some domestic PVC paste resin manufacturers at present, some companies will carry out maintenance work in the second half of the month; as a result, there will be no noticeable decline in market supply, with only supply of certain specific grades potentially becoming tight.

Rapid rebound after a drop: Can optimism for PVC paste resin persist in June? In May, the prices of PVC paste resin in the domestic market changed rapidly, falling first before rising again, with no period of stability in between. In June, both positive and negative factors influenced the market; can the price of PVC paste resin continue to rise? 　　In April, domestic PVC paste resin prices declined continuously, the market trading atmosphere was sluggish, and some companies began to face inventory pressures; after the May Day holiday, the market trading atmosphere