The Zhitong Finance App learned that Guosheng Securities released a research report stating that according to Baichuan Yingfu, as of April 17, 2024, the TMA price had risen to 25,800 per ton, up 69% from 153,000 per ton in late February. At the same time, the TMA cost side with meth as the core is relatively stable, and the rise in TMA prices since late February has not led to a simultaneous rise in production costs. If there is no significant increase in industry supply, TMA is expected to continue to be booming. It is recommended to focus on: Zhengdan Shares (300641.SZ) (TMA production capacity 85,000 tons), a leading manufacturer that has opened up the metacylene-TMA-TOTM integrated industrial chain; Baichuan Co., Ltd. (002455.SZ) (TMA production capacity 40,000 tons), the core manufacturer of the industry.

Guosheng Securities's main views are as follows:

TMA requires rigidity, low cost ratio, and strong downstream bearing capacity

TMA (terephthalic anhydride) is a chemical raw material mainly used to enhance downstream heat resistance. The three major downstream high-heat-resistant PVC cables, powder coatings, and insulating materials account for 52%, 40%, and 7% of China's TMA demand, respectively. On the one hand, there are currently no alternatives to TMA. On the other hand, according to estimates by Guosheng Securities, TMA has low cost sensitivity in both direct and indirect links between the two major downstream links:

PVC cable: TMA is the core raw material of TOTM, a PVC plasticizer, and TOTM is mainly used in 95℃ and 105℃ high heat-resistant PVC cables, and PVC cable materials with low heat resistance grades do not need to be used. For direct downstream, since high-heat-resistant PVC cables account for only a few grades, TOTM accounts for the actual overall cost of PVC cable manufacturers; for indirect downstream, it is estimated that TMA accounts for only 1.79% of the total cost of 105℃ heat-resistant PVC cables.

Powder coatings: Polyester resins used to produce epoxy/polyester hybrid powder coatings require the addition of TMA to improve their heat resistance, while other types of powder coatings such as polyester/HAA are less necessary. Therefore, for direct downstream polyester resin manufacturers, TMA accounts for a low cost; for indirect downstream, it is estimated that in epoxy/polyester powder coatings, TMA accounts for about 0.74%-2.34% of the cost.

Overseas production capacity continues to withdraw, and the industry pattern is improving

Triphthalic anhydride has high requirements for production safety management. If not handled carefully during production, there are risks to the human body and environment. In the early years, global TMA production capacity was mainly concentrated overseas. In 2006, the TMA production capacity of nine overseas manufacturers accounted for 87% of the world's total production capacity. By the end of 2016, BP-Amoco's Malaysian and Belgian plants, Saarbergwerk in Germany, Daixelot in Japan, and Mitsubishi Gas in Japan had all shut down or stopped production.

As of 2022 H2, there are only a few companies with normal overseas production, such as Ineos Joliet; domestically, before 2007, China's TMA manufacturers reached up to 10; in 2010, China's main TMA manufacturers were reduced to 5; in 2014, China formed a pattern where the four major companies, Zhengdan Co., Ltd., Baichuan Co., Ltd., Bolin Chemical and Teda New Materials occupied almost all production capacity. Bolin Chemical TMA was shut down in 2021. The domestic production capacity of TMA Zhengdan Co., Ltd., Baichuan Co., Ltd. and Teda New Materials was 85,000 tons, 40,000 tons, and 22,000 tons respectively. The three manufacturers occupied almost all production capacity.

Prices have accelerated upward, costs have stabilized, and TMA's profitability has jumped

According to Baichuan Yingfu, as of April 17, 2024, the TMA price had risen to 25,800 per ton, up 69% from 153,000 per ton in late February. At the same time, the TMA cost side with metatylene as the core is relatively stable, and the rise in TMA prices since late February has not led to a simultaneous rise in production costs.

As of the week ending April 12, 2024, the average cost of the TMA industry was only 5.1% higher than in late February; the accelerated rise in prices and the relative stability of costs led to a jump in TMA gross profit since late February this year. As of April 12, 2024, the average gross profit of the TMA industry was 13,149 yuan/ton, up 1159.51% year on year, and industry inventories were also low.

At the same time, TMA has a certain project construction cycle. Take the Zhengdan shares fund-raising project as an example. The construction cycle for the 40,000 tons/year TMA project is 24 months. Among them, the Feasibility Study Report, EIA, Safety Assessment, and Project Setup took 5 months, 13 months from preliminary design work to trial operation, and 6 months from project trial operation to project completion and commissioning. Profitability has soared, and the superposition industry has a hard production capacity construction cycle. Guosheng Securities believes that TMA is expected to enter a high profit cycle.

Risk warning: New supply has appeared in the industry, new alternative products have appeared, and downstream profits have declined sharply.