KaiYuan Securities: Demand for architectural glass is stable, while excess capacity in photovoltaic glass may drag down soda ash growth

According to the Zhitong Finance APP, Kaiyuan Securities released a research report stating that the demand for architectural glass is expected to remain at a high level in the future, and there is no need to be overly pessimistic about the demand for float glass. In terms of photovoltaic glass, as it continues to incur losses, its capacity growth may slow down, and the growth of soda ash demand may significantly decelerate. Looking ahead, it is expected that multiple soda ash production facilities will still be put into operation. The firm believes that low-cost natural soda processes may stand out in the future. Recommended stock: Berun Chemical (000683.SZ). Beneficiary stocks: China Salt Chemical (600328.SH), SDHH (000822.SZ).

Key points from Kaiyuan Securities are as follows:

Accelerated urban renewal and national subsidies stimulating renovation demand may support float glass demand

The demand for second-hand housing renovations is expected to continue to grow, and there is no need to be pessimistic about the demand for float glass. Since 2000, China's real estate has entered a period of rapid development. In 2021, the domestic housing completion area was 1.014 billion square meters, an increase of 271.43% compared to 2001, with a compound annual growth rate of 6.78%; the sales area of commercial housing was 17.94 million square meters, an increase of 763.52% compared to 2001, with a compound annual growth rate of 11.38%. Assuming a lifespan of 20 years for doors and windows, if 2000 is considered the starting year of China's real estate cycle, then from 2020 onwards, the stock of second-hand houses will gradually enter a peak period for renovation or door and window replacement. As houses built after 2005 gradually reach 20 years of age, renovation demand is expected to gradually increase. Currently, the window-to-wall ratio of commercial housing and office buildings is gradually increasing, continuously driving the demand for large areas of glass. Moreover, as commercial housing enters the "improvement" era, the window-to-wall ratio of new buildings may further increase, leading to a higher glass usage compared to traditional buildings. In summary, the firm believes that the demand for architectural glass is still expected to remain at a high level, and there is no need to be overly pessimistic about the demand for float glass.

Photovoltaic glass: prominent supply-demand contradictions, new capacity may slow down, potentially dragging down soda ash demand growth

The new capacity of photovoltaic glass is being rapidly released, putting downward pressure on prices. Since 2021, with the lifting of restrictions on photovoltaic glass capacity, the capacity has rapidly expanded. According to Baichuan Yingfu data, the capacity of photovoltaic glass has increased from 11.73 million tons in 2020 to 44.77 million tons in 2024, an increase of 281.64%. As the capacity of photovoltaic glass is rapidly released and the growth rate of downstream photovoltaic installations slows down, there is a rapid oversupply across various segments, including photovoltaic glass. Currently, the profitability of photovoltaic glass companies is further under pressure, and in the future, some photovoltaic glass production lines may gradually undergo maintenance to alleviate loss pressures. Since 2020, the continuous release of photovoltaic glass capacity and the high operation of float glass capacity have continuously driven the growth of soda ash demand. According to Zhuochuang Information data, the apparent consumption of soda ash in 2024 is expected to be 35.2331 million tons, a year-on-year increase of 13.49%. In the future, as photovoltaic glass continues to incur losses, its capacity growth may slow down, and the growth of soda ash demand may significantly decelerate.

The soda ash industry faces significant new capacity pressure, and low-cost natural soda processes may stand out in the future

Looking ahead, it is expected that multiple soda ash production facilities will still be put into operation: Berun Chemical is expected to add 2.8 million tons of natural soda capacity, facing significant capacity pressure; additionally, there are plans for China Salt Chemical to develop a natural soda mine project in Tongliao, Inner Mongolia, with a first phase planned capacity of 5 million tons As the new production capacity of photovoltaic glass gradually decreases, the demand for soda ash is further under pressure, while the supply side still has a considerable amount of new production capacity, significantly increasing the pressure of supply-demand imbalance. According to the cost estimates from Baichuan Yingfu, as of August 1, 2025, the process costs for the lithium carbonate method, ammonia soda process, and natural soda process are 1,246, 1,395, and 679 yuan/ton respectively. Based on these process costs, currently, only the natural soda process remains profitable. Additionally, referencing overseas experience, the natural soda process dominates the global soda ash competition. According to China Energy Network, the United States, with its abundant natural soda mineral resources and advanced production technology, has long held a dominant position in the global soda ash export market. The U.S. possesses 99% of the world's natural soda resources, and its trade volume accounts for about 50% of the total global soda ash trade volume, giving it significant influence and voice in the international soda ash market. In summary, the bank believes that the low-cost natural soda process may stand out in the future.

Risk Warning: The pace of capacity exit is slower than expected, the commissioning of natural soda projects is below expectations, and downstream demand is weaker than expected