The encapsulation film industry is stabilizing at the bottom, down about 60% comparing with the beginning of 23.
Demand of the encapsulation film is expected to be boosted by falling module prices. Since its high in 2021, the PV encapsulation film industry has been on a downward trend. The average decline of major film companies from the high point in 2021 is 71%, and the average decline from the beginning of 2023 is 60%. According to Wind Consensus Estimates, the average PB in 2024 and 2025 will be 2 and 1.6 times respectively.
The global PV installation is growing at a high rate, and module price reductions have stimulated the release of demand.
It is estimated that the global new installed PV capacity will be 530, 630 and 730GW respectively from 2024 to 2026, with a CAGR of about 17%. The decrease of the module price spurs the release of overseas demand. Since Q4 2022, module prices have continued to fall, stimulating the release of PV installed demand.
The amount of module exports for the full year of 2023 will be about 208W, up 34% YoY. Cumulative module exports in Q1 2024 will be 67.6GW, up 33% year-on-year from Q1 2023. Pakistan, Saudi Arabia and other countries are expected to explode in demand. From the perspective of export structure, the world's top three markets for importing Chinese photovoltaic modules in Q1 2024 are Europe, India and Brazil, accounting for 57% of the global market.
Judging from the data in the first quarter of this year, the cumulative cargo volume in Asia-Pacific (Pakistan, India, etc.) increased by 160% year-on-year. The cumulative cargo volume in the Americas (Brazil, etc.) increased by 18% year-on-year. The cumulative cargo volume in the Middle East (Saudi Arabia, etc.) increased by 204% year-on-year . China’s close economic cooperation with these countries, especially energy project cooperation under the “Belt and Road” initiative, will further promote the flow of technology and capital and accelerate the development and implementation of photovoltaic projects.
In 2025, the global encapsulation film market space will be about 70 billion, and the CAGR will be about 19% from 2023 to 2025.
We estimate that the global demand for encapsulation film will reach 7 billion square meters in 2025, with a compound growth rate of 19% from 2023 to 2025. If the price is 10 yuan per square meter, it is expected that the market space will be about 70 billion yuan in 2025. Assumptions: 1) Global installed capacity: From 2023 to 2025, the global installed capacity of new PV will be 446, 530 and 630GW, respectively, an increase of 93%, 19% and 19% year-on-year. 2) According to the company's announcement, the photovoltaic capacity ratio is 1.2:1. 3) From 2023 to 2025, a single GW module will consume 9.2 million square meters of adhesive film.
Source: Zheshang Securities
