2022-2023 EPS Market Annual Data Analysis
Introduction: China’s EPS industry saw an overcapacity in the past five years. New EPS units were put into operation in 2022. At the same time, the increment in downstream demand was limited. Thus, EPS producers were active in promoting exports with industrial competition intensifying. The profit in the EPS industry dropped by 57.08% Y-O-Y. Export volume rose by 80.65% Y-O-Y.
2022 China EPS Annual Data Change
1.EPS industrial capacity utilization rate decreased.
The capacity utilization rate in China’s EPS industry first rose and then fell from 2018 to 2022. From 2018 to 2021, the capacity utilization rate improved amid the increase in EPS output. However, the capacity utilization rate declined by 7.52 percentage points Y-O-Y with EPS producers’ production enthusiasm decreasing due to weakened downstream demand and shrunk profit. The capacity utilization rate in the EPS industry can hardly improve notably amid oversupply.
2.EPS industrial gross profit decreased.
EPS supply has increased with new units coming on stream in succession since 2021. EPS industrial profit kept shrinking. From January 1 to December 23, 2022, the average EPS industrial gross profit was RMB 358/mt, down 57.08% Y-O-Y. Industrial profit in H2, 2022 decreased compared with that in H1, 2022. First, industrial competition intensified with new capacity releasing. Second, downstream demand has not met expectations. Second, increased cost gave more pressure on profits. The EPS industry is expected to involve under supply and demand pressure as some newly-added EPS units may be put into production in 2023.
3. EPS export volume rose notably.
From 2018 to 2022, the export volume of EPS showed a V-shaped trend, with a CAGR of 1.7%. Therein, the export volume in 2021 was 155kt, which reached a 5-year low point caused by tough maritime transportation. SCI reckons that the total export volume in 2022 will be 280kt, down 80.65% Y-O-Y in line with the slowdown of China’s domestic demand increment, high USD market prices, and the increase in the EPS demand from some regions in the USD market. From monthly exports in 2022, export volume in February reached an annual low point with EPS supply shrinking around Spring Festival. Entering March, export volume kept rising due to increased supply with EPS units restarting after Spring Festival. China EPS enterprises may be active in raising the export volume in 2023 as China’s EPS industry will possibly see an oversupply.
4.EPS import volume kept decreasing.
From 2018 to 2022, China’s EPS import volume showed a downtrend in line with the increment in China’s domestic supply. The export volume in 2018 was 91.6kt, up 176.74% Y-O-Y, reaching a 5-year high point caused by temporary tight supply and increased graphite EPS demand. It is expected that the import volume will be 17kt, down 42.95% Y-O-Y. SCI reckons that EPS imports can hardly improve notably in 2023, caused by continuous increments in China’s domestic EPS supply.
Conclusion: China EPS market prices will possibly be relatively high First and then fall in 2023. Downstream demand may improve gradually after Spring Festival, giving stronger support to EPS market prices. However, EPS market prices may move down later, with the EPS market entering the off-season in Q3 and Q4, 2023. It is expected that EPS market prices will be affected by costs, fundamentals, and macro atmospheres. China’s EPS capacity is expected to increase further in 2023, while downstream demand may be tepid. Thus, SCI reckons that the average annual price of EPS in 2023 will be lower than that in 2022 as EPS market prices may evolve under supply pressure.
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