How to break through the shortage of photovoltaic film in China, which is only 5% of the cost of raw materials

The rapid development of the photovoltaic industry today is closely related to China's emphasis on the photovoltaic industry. Currently, the core production capacity of the entire photovoltaic industry chain products almost comes from China: silicon wafers account for 97% of global production, silicon materials account for 75% of global production, modules account for 71% of global production, and inverters account for 60% of global production.

However, although Chinese companies hold the initiative in the photovoltaic industry chain, they rely almost entirely on overseas imports for photovoltaic film raw materials, even though photovoltaic film accounts for only 5% of the total cost of the photovoltaic industry chain!

At present, the main raw materials for mainstream photovoltaic film include EVA resin and POE resin, with resin accounting for over 90% of the film. However, the Chinese photovoltaic industry is constrained by the cost of adhesive film raw materials, which account for only 5% of the total cost.

Therefore, this article will explore with you the current state of the resin raw materials used for photovoltaic film in China.

At present, only three domestic companies in Chinese Mainland have the ability to produce photovoltaic EVA, and no one has the ability to produce photovoltaic POE.

Specifically, EVA is a chemical raw material with a wide range of application scenarios, and its application scenarios vary significantly depending on the content of vinyl acetate (VA).

The VA content in the material directly affects the bonding strength of the adhesive film. The lower the VA content, the closer the product characteristics are to low-density high-pressure polyethylene (LDPE); The higher the VA content, the closer the product characteristics are to rubber. Photovoltaic grade EVA materials need to have a VA content of 28% -33%.

In addition to the VA content, photovoltaic grade EVA materials also need to have a high melt index (MI), which refers to the flowability of the resin after melting. Generally speaking, ordinary photovoltaic grade EVA needs to ensure an MI higher than 25%, while the MI range of white EVA material is 6% -15%.

From this, it can be seen that photovoltaic grade EVA is a relatively high-end product, and not all EVA materials can be applied to the photovoltaic industry. The development of EVA in China started relatively late, and coupled with special coefficient requirements, 70% of photovoltaic grade EVA in China still relies on imports.

Looking at all domestic enterprises with EVA production capacity, only three are capable of producing photovoltaic grade EVA: Silbang, Lianhong Xinke, and Ningbo Formosa Plastics. Yulin Nenghua, Yangzi Petrochemical, and Zhonghua Quanzhou Petrochemical all started producing EVA materials from May to July 2021, but currently do not have the ability to produce photovoltaic grade EVA.

Due to the high production process requirements for photovoltaic grade EVA, the expansion cycle is slow, and it may take about 5 years to fully reach full production. Most EVA companies choose to first produce LDPE as a transition, and then switch to EVA after the machine has been run in and stabilized.

In addition, due to the high customer stickiness of photovoltaic film suppliers, all photovoltaic module products need to obtain local product certifications for export, such as UL certification in the United States and TUV certification in the European Union. Therefore, the substitution of photovoltaic film raw materials requires a certain certification period, and it is difficult to quickly complete independent substitution in a short period of time.

In view of this, the breakthrough of photovoltaic grade EVA in China mainly lies in three companies: Silbang, Lianhong Xinke, and Ningbo Formosa Plastics.

Lianhong Xinke is the first photovoltaic grade EVA manufacturer to be listed, with a background in the Chinese Academy of Sciences. The company's business spans across photovoltaic EVA, lithium film materials, and biodegradable materials, and is expected to become a platform enterprise in the field of new materials.

The production of EVA products in the company in 2020 was 131300 tons, and the proportion of photovoltaic film materials produced by EVA equipment can usually reach 30% -50% of the total production capacity of the equipment. Recently, Lianhong Xinke announced the completion of the expansion and renovation of its EVA plant, which will increase the production of photovoltaic grade EVA materials by 18000 tons per year. It is expected to be completed and put into operation by the end of the first quarter of 2022.

In addition to Lianhong Xinke, Silbang may also enter the capital market through capital mergers and acquisitions. A-shares polyester company Dongfang Shenghong plans to acquire Chinese photovoltaic grade EVA leader Sirbond for 14.36 billion yuan. Sirbond currently has a production capacity of 300000 tons of EVA, with a long-term utilization rate of over 100%, of which 200000 tons can be used entirely for the production of photovoltaic materials.

From a technical perspective, Sirbond is the most mature company in the country in terms of photovoltaic grade EVA preparation technology. It has mastered the Basel tube technology and is expected to achieve 100% production of photovoltaic grade EVA materials, while other companies have a photovoltaic grade EVA production rate of only about 50%.

After the acquisition of Sirbond, Dongfang Shenghong will transform from a polyester leader to a photovoltaic grade EVA material leader, which is expected to usher in value reshaping. Of course, the acquisition itself still has certain variables.

Another company, Ningbo Formosa Plastics, currently has no plans to go public.

In the photovoltaic industry, POE materials are continuously penetrating the market share of EVA materials, but the production of POE resin is tightly blocked by overseas enterprises, and there is no company in China that can produce photovoltaic grade POE materials.

At present, Dow Chemical has become the world's leading POE resin company with a market share of 42%, while Mitsui Chemicals and Mobil Corporation both rank second and third with a market share of 19%.