According to the Zhitong Finance APP, Everbright Securities released a research report stating that on July 19, the downstream hydropower project of the Yarlung Tsangpo River officially commenced construction. The project is located in Nyingchi City, Tibet Autonomous Region, and mainly adopts the development methods of straightening bends and tunnel water diversion, constructing five stepped power stations with a total investment of approximately 1.2 trillion yuan. The electricity generated by the project will primarily be transmitted outside, while also considering local self-use demand in Tibet. The downstream hydropower project of the Yarlung Tsangpo River is not only a milestone in the energy and infrastructure sectors but also a systematic practice of China's coordinated development and security, ecology and innovation. Its market impact will long radiate across multiple industries such as infrastructure, energy, and materials, while its strategic value is reflected in multiple dimensions including national energy security, border stability, and global climate governance. It is recommended to pay attention to infrastructure-related chemical products, with soda ash, PVC, and water-reducing agents expected to benefit.
<h2>The main viewpoints of Everbright Securities are as follows:</h2>
1. &#34;Anti-involution&#34; policy release combined with the commencement of the Yarlung Tsangpo hydropower station, focus on infrastructure-related chemical products
On July 18, the State Council Information Office held a press conference to introduce the development situation of industry and information technology in the first half of 2025. Xie Shaofeng, Chief Engineer of the Ministry of Industry and Information Technology, stated that a new round of stable growth work plans for ten key industries, including steel, non-ferrous metals, petrochemicals, and building materials, will be implemented to promote structural adjustment, optimize supply, and eliminate backward production capacity in key industries. Specific work plans will be released in the near future.
In January 2025, Zhang Yunming, Vice Minister of the Ministry of Industry and Information Technology, stated that a new round of stable growth work plans for ten key industries would be launched, fully releasing the effects of large scale, wide relevance, and strong driving force in the steel, non-ferrous, petrochemical, chemical, building materials, machinery, automotive, power equipment, light industry, and electronics industries. Increased support will be provided to industrial provinces and cities. The policy mechanism to promote the orderly transfer of industries will be improved, supporting local development of characteristic advantageous industries to contribute more to industrial economic growth. The Ministry of Industry and Information Technology's reiteration of the stable growth work plan for ten key industries clarifies the policy goal of adjusting industry structure, promoting supply-side optimization, and eliminating backward production capacity, which is expected to lead the orderly development of the petrochemical and chemical industry.
On July 19, the downstream hydropower project of the Yarlung Tsangpo River officially commenced construction. The project is located in Nyingchi City, Tibet Autonomous Region, and mainly adopts the development methods of straightening bends and tunnel water diversion, constructing five stepped power stations with a total investment of approximately 1.2 trillion yuan. The electricity generated by the project will primarily be transmitted outside, while also considering local self-use demand in Tibet. The downstream hydropower project of the Yarlung Tsangpo River is not only a milestone in the energy and infrastructure sectors but also a systematic practice of China's coordinated development and security, ecology and innovation. Its market impact will long radiate across multiple industries such as infrastructure, energy, and materials, while its strategic value is reflected in multiple dimensions including national energy security, border stability, and global climate governance. It is recommended to pay attention to infrastructure-related chemical products, with soda ash, PVC, and water-reducing agents expected to benefit.
2. Soda Ash: Under the &#34;anti-involution&#34; background, industry concentration is expected to increase, and the demand for photovoltaic glass will improve with limited new soda ash production capacity, leading to an expected increase in industry concentration under the &#34;anti-involution&#34; background.
In 2024, there are 15 companies in China's soda ash industry with a production capacity greater than 1 million tons, with a total capacity of 30.9 million tons, accounting for about 70% of the total capacity of 44.45 million tons. Among them, the top three companies, Henan Jinshan, Berun Chemical, and SDHH, have production capacities of 6.7 million tons, 5 million tons, and 3 million tons, respectively, with a CR3 concentration of about 33% and a CR6 concentration of 45%, indicating a relatively dispersed capacity distribution in the domestic soda ash industry
According to the &#34;Access Conditions for the Soda Ash Industry&#34; issued by the Ministry of Industry and Information Technology in 2010, the annual production capacity of newly built or expanded ammonia-soda method soda ash must not be less than 1.2 million tons/year, and the annual production capacity of the combined soda method must not be less than 600,000 tons/year. In addition, certain requirements are also imposed on the energy consumption, emissions, and product quality of newly built or expanded soda ash projects. Environmental policy pressures have led to the shutdown of some soda ash manufacturers. Although the national government abolished the &#34;Access Conditions for the Soda Ash Industry&#34; in 2020, new projects in the soda ash industry remain limited due to its classification as a high-pollution industry.
In 2025-2026, the planned new soda ash production capacity in China is 8.68 million tons, accounting for 20% of the total capacity in 2024. With the introduction of the chemical industry's &#34;anti-involution&#34; policy, the supply-side reform of the soda ash industry is expected to continue, thereby promoting improvements on the supply side and increasing industry concentration.
Downstream glass consumption awaits recovery, photovoltaic installations are expected to boost soda ash demand
In 2024, China's flat glass production is expected to be approximately 83.709 million weight cases (about 4.185 million tons), a year-on-year increase of 3%, with a CAGR of 1.1% from 2020 to 2024. Based on the requirement of 0.2 tons of soda ash to produce 1 ton of glass, the flat glass production in 2024 corresponds to a soda ash demand of 837,000 tons. Due to the sluggish real estate market, glass production growth is slow, dragging down soda ash demand. In 2024, the national photovoltaic new installed capacity is expected to reach 278 million kilowatts, a year-on-year increase of 28%, with a cumulative installed capacity of 886 million kilowatts, a year-on-year increase of 45%. The growth in photovoltaic installations is expected to drive the demand for photovoltaic glass, thereby partially restoring soda ash demand.
3. PVC: Infrastructure and real estate demand await recovery, &#34;anti-involution&#34; combined with stricter environmental regulations promote industrial structural transformation and upgrading
In the downstream consumption structure of PVC (by consumption volume), the building materials industry remains the main application field for PVC, with pipes, fittings, and profiles accounting for a total of 41% of the consumption volume in 2024, indicating that PVC demand is closely related to the real estate and infrastructure industries. Affected by the sluggish infrastructure and real estate market, the apparent consumption of PVC from 2019 to 2024 has a 5-year CAGR of only 1.26%, with the apparent consumption of PVC in 2024 expected to be about 20.89 million tons, an increase of 1.31% compared to the same period last year. The downstream demand for PVC still awaits recovery.
As of July 2025, China's PVC production capacity is 28.86 million tons, with the top three producers being Zhongtai Chemical, Xinjiang Tianye, and Xinfeng Group, with capacities of 2.1 million tons, 1.4 million tons, and 1.15 million tons, respectively. The CR3 concentration is about 16%, and the CR6 concentration is 26%, indicating a relatively low concentration of domestic PVC production capacity. PVC is a traditional high-pollution, high-energy-consuming industry. The &#34;Minamata Convention on Mercury&#34; issued in August 2017 requires a reduction in mercury emissions and supports the research and development of low-mercury and mercury-free catalysts. After confirming the feasibility of mercury-free catalyst technology for five years, the use of mercury-containing catalysts will not be allowed. The previous &#34;Work Plan for Steady Growth in the Petrochemical and Chemical Industry&#34; (2023) proposed to promote energy-saving, pollution reduction, and carbon reduction transformations in the PVC industry. Against the backdrop of stricter environmental policies, the increase in PVC supply is relatively small, with PVC production in China expected to be 23.28 million tons in 2024, with a year-on-year growth rate of only 3.4%. The expected increase in PVC production capacity in China for 2025-2026 is 5 million tons, accounting for 17% of the total capacity in 2024
Environmental policies continue to tighten, coupled with the introduction of &#34;anti-involution&#34; policies, which are expected to force the transformation and upgrading of industrial structures, while the industry concentration is improved, and small and backward production capacities are gradually eliminated.
Risk Warning: Policy progress may fall short of expectations, the pace of capacity elimination may be slower than expected, and there are risks of fluctuations in industry prosperity

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Everbright Securities released a research report stating that with the implementation of the "anti-involution" policy and the commencement of the Yarlung Tsangpo River downstream hydropower project, infrastructure-related chemical products such as soda ash and PVC are expected to benefit. The total investment in this project is approximately 1.2 trillion yuan, marking a significant advancement for China in the energy and infrastructure sectors, which is expected to have a long-term impact on multiple industries and promote supply-side structural reform. The Ministry of Industry and Information Technology will also launch a work plan to stabilize growth, promoting structural adjustment and optimization in key industries

Everbright Securities: Downstream demand for soda ash and PVC awaits recovery, "anti-involution" is expected to accelerate supply-side clearance