Summary of the Conference Call on the Polyester Filament Industry - Tongkun and Xinfengming Industry Overview - The polyester filament industry is primarily driven by downstream demand from the apparel and home textile sectors, accounting for 85% of total demand, which is closely related to the health of the apparel supply chain [1][3] - The industry has experienced several peaks in production capacity growth over the past few years, but demand growth has remained stable at around 5% to 7% due to a trend of consumption downgrade [1][5] Key Insights and Arguments - Significant slowdown in new production capacity is expected post-2024, with capacity growth from 2024 to 2026 projected to be significantly lower than demand growth, leading to a continuous rise in operating rates [1][6] - The industry is highly concentrated, with the top three companies (Tongkun, Xinfengming, and Hengli Petrochemical) holding a 61% market share, which enhances their market control and may lead to price increases [1][8] - The operating rate of the polyester filament industry is forecasted to rise, potentially reaching 92% by 2026, which is above the average operating rate of the chemical industry [1][7] Supply and Demand Dynamics - In 2025, the supply-demand balance is expected to improve, with leading companies implementing a 5% reduction in POY production, resulting in a profit of nearly 300 yuan per ton [4][11] - The supply side is characterized by a decline in growth rates and a concentrated supply structure, allowing companies to exert pricing power [11] - The industry has seen a history of production capacity peaks, with growth rates exceeding 10% in certain years, leading to supply excess [5] Long-term Industry Outlook - The long-term outlook for the polyester filament industry is positive, with potential advantages including continuous optimization of the supply-demand structure and the possibility of old capacity elimination [12] - Historical data indicates that the peak cash flow per ton for POY reached 1,200 yuan, suggesting significant upside potential from current profit levels [12] - The industry is currently undervalued, with companies like Tongkun and Hengyi Petrochemical showing relatively low price-to-book ratios [12] Company-Specific Insights - Tongkun has shown significant growth, with revenue increasing from 9.183 billion yuan in 2008 to 101.3 billion yuan in 2024, and net profit growing from 104 million yuan to 1.202 billion yuan over the same period [15] - Xinfengming's revenue grew from 4.5 billion yuan in 2009 to 67 billion yuan in 2024, with net profit increasing from 41 million yuan to 1.1 billion yuan [15] - Both companies have strong production capacities, with Tongkun at 13.5 million tons and Xinfengming at 8.45 million tons, and both are expanding upstream into PTA and MEG production [15] Market Performance and Valuation - The stock performance of Tongkun and Xinfengming has been closely aligned, with both companies' valuations primarily reflecting their polyester filament businesses [16] - Tongkun's additional asset in the petrochemical sector, which has not been fully reflected in its stock price, could potentially add 20 to 30 billion yuan in market value [16] Conclusion - The polyester filament industry is showing signs of recovery and is expected to maintain a positive trajectory, particularly as seasonal demand increases and operating rates rise [13][14] - The industry is recommended for attention due to its improving market conditions and potential for further valuation recovery [18]

1. Report Industry Investment Rating No information provided. 2. Core Viewpoints of the Report - The PVC fundamentals are difficult to drive the market upward continuously. After the weakening of macro - sentiment, the PVC rebound is limited. The supply side has high upstream开工 and new capacity, while the demand side has weak domestic demand and neutral exports, and the social inventory is accumulating [3]. - The market sentiment of caustic soda has been significantly boosted, and the caustic soda futures have been running strongly recently. The supply side has new production expectations, and the demand side has rigid support from the alumina industry, but the non - aluminum demand is weak. The inventory pressure is expected to increase [3]. 3. Summary by Relevant Catalogs Market News and Important Data PVC - Futures price and basis: The closing price of the PVC main contract is 5151 yuan/ton (- 109), the East China basis is - 101 yuan/ton (+ 99), and the South China basis is - 131 yuan/ton (+ 29) [1]. - Spot price: The East China calcium carbide method quotation is 5050 yuan/ton (- 10), and the South China calcium carbide method quotation is 5020 yuan/ton (- 80) [1]. - Upstream production profit: The semi - coke price is 535 yuan/ton (+ 0), the calcium carbide price is 2805 yuan/ton (- 25), the calcium carbide profit is 87 yuan/ton (- 25), the PVC calcium carbide method production gross profit is - 315 yuan/ton (+ 130), the PVC ethylene method production gross profit is - 595 yuan/ton (+ 26), and the PVC export profit is - 16.4 US dollars/ton (- 2.6) [1]. - Inventory and开工: The PVC factory inventory is 36.8 tons (- 1.4), the PVC social inventory is 41.1 tons (+ 1.8), the PVC calcium carbide method开工 rate is 77.52% (+ 0.59%), the PVC ethylene method开工 rate is 68.31% (- 1.92%), and the PVC开工 rate is 74.97% (- 0.10%) [1]. - Downstream order situation: The pre - sales volume of production enterprises is 69.6 tons (+ 0.6) [1]. Caustic Soda - Futures price and basis: The closing price of the SH main contract is 2644 yuan/ton (- 14), and the basis of 32% liquid caustic soda in Shandong is - 50 yuan/ton (+ 14) [1]. - Spot price: The quotation of 32% liquid caustic soda in Shandong is 830 yuan/ton (+ 0), and the quotation of 50% liquid caustic soda in Shandong is 1340 yuan/ton (+ 0) [2]. - Upstream production profit: The single - variety profit of caustic soda in Shandong is 1603 yuan/ton (+ 0), the comprehensive profit of chlor - alkali in Shandong (0.8 tons of liquid chlorine) is 459.5 yuan/ton (+ 0.0), the comprehensive profit of chlor - alkali in Shandong (1 ton of PVC) is 592.53 yuan/ton (+ 35.00), and the comprehensive profit of chlor - alkali in the Northwest (1 ton of PVC) is 1719.84 yuan/ton (+ 271.52) [2]. - Inventory and开工: The liquid caustic soda factory inventory is 38.39 tons (+ 0.96), the flake caustic soda factory inventory is 2.40 tons (+ 0.04), and the caustic soda开工 rate is 82.60% (+ 2.20%) [2]. - Downstream开工: The alumina开工 rate is 83.61% (+ 0.33%), the dyeing and printing开工 rate in East China is 58.89% (+ 0.00%), and the viscose staple fiber开工 rate is 84.55% (+ 6.75%) [2]. Market Analysis PVC - Policy may lead to expectations of eliminating old - fashioned PVC production capacity, but the fundamentals are difficult to drive the market upward. The supply side has high开工 and new capacity, the demand side has weak domestic demand and neutral exports, and the social inventory is accumulating [3]. Caustic Soda - The market sentiment has been boosted by the possible elimination of old - fashioned caustic soda production capacity. The supply side has new production expectations, the demand side has rigid support from the alumina industry, but the non - aluminum demand is weak, and the inventory pressure is expected to increase [3]. Strategy PVC - Unilateral: Neutral. The market rebound may be limited due to the cooling of macro - sentiment and insufficient fundamental drivers [4]. - Inter - delivery spread: Do reverse spreads when the V09 - 01 spread is high [4]. Caustic Soda - Unilateral: Cautiously go long for hedging. The cost support of caustic soda is strengthened, and the caustic soda market is expected to continue to be strong [5].

Group 1: Market News and Key Data PVC - Futures price and basis: The closing price of the main PVC contract was 5,260 yuan/ton (+142), the East China basis was -200 yuan/ton (-82), and the South China basis was -160 yuan/ton (-42) [1] - Spot price: The East China calcium carbide method was quoted at 5,060 yuan/ton (+60), and the South China calcium carbide method was quoted at 5,100 yuan/ton (+100) [1] - Upstream production profit: The semi - coke price was 535 yuan/ton (+0), the calcium carbide price was 2,830 yuan/ton (+0), the calcium carbide profit was 112 yuan/ton (+0), the gross profit of PVC calcium carbide method production was -315 yuan/ton (+130), the gross profit of PVC ethylene method production was -595 yuan/ton (+26), and the PVC export profit was -13.8 US dollars/ton (-9.0) [1] - PVC inventory and operation: The in - factory PVC inventory was 36.8 tons (-1.4), the social PVC inventory was 41.1 tons (+1.8), the operating rate of the PVC calcium carbide method was 77.52% (+0.59%), the operating rate of the PVC ethylene method was 68.31% (-1.92%), and the overall PVC operating rate was 74.97% (-0.10%) [1] - Downstream order situation: The pre - sales volume of production enterprises was 69.6 tons (+0.6) [1] Caustic Soda - Futures price and basis: The closing price of the SH main contract was 2,658 yuan/ton (+89), and the basis of 32% liquid caustic soda in Shandong was -64 yuan/ton (-89) [1] - Spot price: The price of 32% liquid caustic soda in Shandong was 830 yuan/ton (+0), and the price of 50% liquid caustic soda in Shandong was 1,340 yuan/ton (-30) [2] - Upstream production profit: The single - variety profit of caustic soda in Shandong was 1,603 yuan/ton (+0), the comprehensive profit of chlor - alkali in Shandong (0.8 tons of liquid chlorine) was 459.5 yuan/ton (-120.0), the comprehensive profit of chlor - alkali in Shandong (1 ton of PVC) was 557.53 yuan/ton (+50.00), and the comprehensive profit of chlor - alkali in the Northwest (1 ton of PVC) was 1,448.33 yuan/ton (+30.00) [2] - Caustic soda inventory and operation: The inventory of liquid caustic soda factories was 38.39 tons (+0.96), the inventory of flake caustic soda factories was 2.40 tons (+0.04), and the operating rate of caustic soda was 82.60% (+2.20%) [2] - Downstream operation of caustic soda: The operating rate of alumina was 83.61% (+0.33%), the operating rate of printing and dyeing in East China was 58.89% (+0.00%), and the operating rate of viscose staple fiber was 84.55% (+6.75%) [2] Group 2: Market Analysis PVC - Policy impact: The upcoming release of the steady - growth work plan for ten key industries such as steel, non - ferrous metals, petrochemicals, and building materials has boosted the PVC market sentiment. The proportion of PVC production devices with a production time of more than 20 years is about 12%, which has led to market expectations of eliminating old - fashioned production capacity [3] - Fundamental analysis: The upstream operation has slightly declined but remains at a high level. There are expectations of new production capacity coming on stream from July to August, so the supply - side pressure is high. The domestic demand of downstream industries remains weak, the operating rate of downstream products has continued to decline month - on - month and is lower than the same period last year; the short - term export situation is neutral. The social inventory continues to accumulate, and the absolute inventory value is high. The supply - demand fundamentals of PVC are still weak, and the inventory is expected to continue to accumulate [3] Caustic Soda - Policy impact: The evaluation of old - fashioned devices in the petrochemical and chemical industries has led to expectations that caustic soda devices that have reached the designed service life or have been in operation for more than 20 years may gradually withdraw from the market, which has significantly boosted market sentiment. Coupled with the further weakening of the liquid chlorine price, the caustic soda futures price has risen significantly [3] - Fundamental analysis: On the supply side, there are few new overhauls upstream, and some chlor - alkali devices that previously reduced production due to poor liquid chlorine sales have gradually increased their loads. The overall operating rate has increased month - on - month, and there are still expectations of new production coming on stream from July to August. On the demand side, the profit of the main downstream alumina industry has expanded, the operation has continued to pick up, and the amount of liquid caustic soda supplied to the main downstream has increased. There is still short - term rigid demand support; non - aluminum demand continues to be weak in the off - season. The factory inventory of caustic soda has increased month - on - month, and the inventory is higher than the same period. With the increase in the load of chlor - alkali production reduction enterprises, the inventory pressure is expected to increase [3] Group 3: Strategies PVC - Single - side strategy: Cautiously go long for hedging; due to the boost of macro - sentiment, the futures price is expected to continue to rise in the short term [4] - Inter - delivery strategy: Do reverse spreads when the V09 - 01 spread is high [4] Caustic Soda - Single - side strategy: Cautiously go long for hedging; with the further weakening of liquid chlorine, the cost support for caustic soda has strengthened. In the short term, the futures price is driven by the expectation of eliminating old - fashioned production capacity, and the macro - sentiment is boosted. The caustic soda futures price is expected to continue to be strong [5]