Summary of Soda Ash Industry Conference Call Industry Overview - The soda ash production methods include ammonia-soda process, dual-soda process, and natural soda process. The natural soda process has the lowest cost at approximately 600 RMB/ton, while the ammonia-soda process costs around 1,300 RMB/ton, and the dual-soda process costs about 1,000-1,100 RMB/ton after considering by-product ammonium chloride [1][4]. Key Points Production Capacity and Structure - The domestic soda ash production capacity structure is changing, with the share of natural soda increasing significantly from 6% in 2023 to over 10% by 2025. The share of ammonia-soda is decreasing, while the dual-soda process is increasing [1][4]. - The industry is highly concentrated, with leading companies holding about 74% of the capacity, primarily located in North China, Central China, and Northwest regions. Major producers include Boyuan Group (660,000 tons, expected to reach 780,000 tons by 2026) and Henan Jinshan (640,000 tons, projected to exceed 800,000 tons after expansion) [1][6]. Cost and Pricing Dynamics - The price difference between light and heavy soda ash typically ranges from 50-100 RMB/ton, with light soda being produced first and then converted to heavy soda at an additional cost of 50-80 RMB/ton [2]. - The domestic soda ash export volume is expected to reach 2.4-2.5 million tons in 2026, up from 2.2 million tons in 2025, with export prices around 160 USD/ton, closely aligned with overseas prices [2][14]. Supply and Demand Factors - The main upstream raw materials for soda ash production include salt, synthetic ammonia, and limestone, while the main downstream demand comes from photovoltaic glass, float glass, and daily-use glass, accounting for about 60% of total demand [3]. - The soda ash industry is currently facing a slight loss in the dual-soda process and significant losses in the ammonia-soda process, with expected prices in 2026 ranging from 1,000 to 1,350 RMB/ton [2][15]. Future Capacity and Production Trends - New capacity additions are expected to slow down in 2026, with the main production increases coming from previously installed facilities reaching full capacity, such as projects from Boyuan Group and Hubei [5][6]. - The anticipated new capacity includes a 1 million ton project in Tongliao, with the first phase of 500,000 tons expected to be operational in the second half of 2027 [5][6]. Global Market Context - Globally, soda ash capacity is approximately 81.5 million tons, with significant production in the US and Turkey. However, overseas companies are also facing losses, leading to the shutdown of a 1.4 million ton natural soda facility in early 2026 [8][9]. - China accounts for about 50% of global soda ash supply, with production expected to increase from 29 million tons in 2021 to approximately 37.86 million tons by 2025 [9][10]. Price Trends and Market Outlook - Historical price trends show that soda ash prices have fluctuated significantly, with a strong market in 2021 reaching nearly 4,000 RMB/ton. The expected price range for 2026 is between 1,000 and 1,350 RMB/ton, with a volatility space of about 300-350 RMB [19][28]. - The industry is expected to remain in a state of oversupply, with limited upward price movement unless significant supply-side changes occur [23][24]. Environmental and Regulatory Factors - The "anti-involution" policy has minimal impact on the soda ash industry, as overall emissions meet national standards. The ammonia-soda process faces more regulatory scrutiny due to higher emissions [22]. Conclusion - The soda ash industry is undergoing significant changes in production methods and capacity structure, with a shift towards more cost-effective natural soda processes. The market is currently characterized by oversupply and price pressures, with future growth dependent on demand recovery and potential export opportunities.

Investment Chain - The prices of non-ferrous metals have risen significantly since February 2026, with copper, aluminum, zinc, lead, tin, nickel, gold, and silver all experiencing price increases. However, fixed asset investment growth has declined, with real estate development investment down by 17.20% year-on-year and manufacturing fixed asset investment growth at only 0.60% [10][11] - In February 2026, the average price of ordinary cement decreased, while the prices of steel and light soda ash also fell. The sales growth of large and light buses declined, but the sales growth of medium-sized buses increased [10][11] Consumption Chain - In January 2026, the year-on-year growth rate of automobile sales showed a slight recovery, increasing to -3.18%. However, the consumer confidence index fell to 89.50 in December 2025, and retail sales growth for home appliances decreased by 14.25% [11][12] - The total retail sales of consumer goods in December 2025 saw a nominal year-on-year growth rate drop to 0.90%, with a cumulative decline of 3.70% [11][12] - Tourism revenue in Beijing increased by 11.40% year-on-year in December 2024, while tourism revenue in Hainan decreased by 20.03% in March 2024 [11][12] Export Chain - In December 2025, exports to Japan and ASEAN countries increased, while exports to the US and EU saw a decline. The export growth rate for electronic products rose to 37.25%, while textile exports fell by 4.23% [12][13] - The cumulative year-on-year growth rate for exports of refined oil, coke, steel, and aluminum increased, while the export amounts for agricultural products, toys, furniture, and other categories decreased [12][13] - The OECD leading indicator for the US rose to 100.50 in January 2026, indicating potential economic improvement [12][13] Price Chain - In February 2026, pork prices decreased to 12.75 yuan per kilogram, while oil prices increased, with WTI rising to 65.63 USD per barrel [13][14] - The price of PVC rose to 4770 yuan per ton, while the price of MDI fell to 13950 yuan per ton [13][14] - The price of cotton increased, and the price of white sugar decreased during the same period [13][14]

Investment Chain - Non-ferrous metal prices have risen since February 2026, with fixed asset investment growth in December 2025 declining to -3.80%[1] - Real estate development investment in December 2025 saw a year-on-year decline of 17.20%[1] - Manufacturing fixed asset investment growth in December 2025 decreased to 0.60%[1] - Infrastructure investment growth in December 2025 fell to -1.48%[1] Consumption Chain - In December 2025, the nominal year-on-year growth rate of social consumption fell to 0.90%, with a cumulative decline of 3.70%[2] - The consumer confidence index in December 2025 dropped to 89.50[2] - In January 2026, automobile sales saw a year-on-year growth rate increase to -3.18%[2] - Home appliance retail sales in December 2025 experienced a year-on-year decline of 14.25%[2] Export Chain - In December 2025, exports to Japan and ASEAN saw a year-on-year growth increase, while exports to the US and EU declined[3] - The export growth rate for electronic products in December 2025 rose to 37.25%[3] - Textile export value in December 2025 decreased by 4.23% year-on-year[3] - Mechanical export value in December 2025 increased by 6.60% year-on-year[3] Price Chain - As of February 2026, the price of pork decreased to 12.75 yuan/kg[4] - WTI crude oil price increased to $65.63 per barrel on February 24, 2026[4] - PVC spot price rose to 4770 yuan/ton on February 24, 2026[4] - The average price of coal in Qinhuangdao increased in February 2026[4]

Core Viewpoint - Sichuan Hebang Biotechnology Co., Ltd. plans to purchase 65,000 tons of soda ash from its affiliate Chongqing Heyou Industrial Co., Ltd. at a unit price of 1,017.70 CNY per ton, totaling 66.15 million CNY (including tax total of 74.75 million CNY) [2][6] Group 1: Transaction Overview - The transaction involves a one-time buyout of 65,000 tons of soda ash at a unit price of 1,017.70 CNY per ton, with a total transaction amount of 66.15 million CNY [6][13] - Chongqing Heyou will provide the company with all customer data and assist in establishing trading relationships with its original customers, along with providing a one-year inventory storage space at no cost [6][15] Group 2: Purpose and Reason for the Transaction - The transaction aims to expand the traditional sales area and integrate overlapping customer resources between the two companies, as they are the only soda ash producers in Sichuan and Chongqing [7] Group 3: Approval and Compliance - The transaction was approved by the company's sixth board of directors with a unanimous vote and does not require submission to the shareholders' meeting [5][8][9] - The transaction does not constitute a major asset restructuring as defined by relevant regulations [4][10] Group 4: Related Party Information - Chongqing Heyou's controlling shareholder, Sichuan Jinteng Enterprise Management Co., Ltd., has delegated its voting rights to the company, establishing a related party relationship [11] Group 5: Pricing and Fairness - The pricing of the transaction is below the average selling price of light soda ash in the Southwest region, deemed fair and reasonable, with no harm to the company's or shareholders' interests [14][18] Group 6: Historical Related Transactions - In the past 12 months, the total amount of various related transactions between the company and Chongqing Heyou has reached 94.98 million CNY, accounting for over 0.5% of the company's latest audited net assets [5][19]

Core Viewpoint - The soda ash futures market is experiencing fluctuations due to changes in supply and demand dynamics, with a notable increase in inventory and production levels, while demand remains under pressure from the glass industry [1][3][5]. Group 1: Market Performance - As of January 9, 2026, the main contract for soda ash futures closed at 1228 CNY/ton, with a weekly K-line showing a downward trend and an increase in open interest by 217,876 contracts compared to the previous week [1]. - During the week of January 5-9, the soda ash futures opened at 1205 CNY/ton, reaching a high of 1277 CNY/ton and a low of 1170 CNY/ton, resulting in a weekly change of 1.57% [2]. Group 2: Inventory and Production - As of January 8, domestic soda ash manufacturers had a total inventory of 1.5727 million tons, an increase of 164,400 tons (11.67%) from the previous week. This includes 836,500 tons of light soda ash (up 104,300 tons) and 736,200 tons of heavy soda ash (up 60,100 tons) [3]. - The industry operating rate increased by 4.43%, and soda ash production rose by 8.11%. The commissioning of the second line at Alashan is expected to further enhance supply [3]. Group 3: Institutional Insights - According to Caixin Futures, soda ash demand is being negatively impacted by a decline in float glass production, with short-term growth in demand expected to be negative. However, demand for light soda ash may increase due to the expansion of lithium carbonate production and improved exports [5]. - The overall production capacity of soda ash is projected to reach 44.6 million tons by 2026, influenced by significant new capacity additions. This high capacity may lead to a production strategy focused on "production as needed," putting pressure on cost lines for ammonia soda production [5]. - Zhengxin Futures suggests that short-term fluctuations in soda ash prices are primarily driven by commodity sentiment, with limited changes in the fundamentals. The market outlook remains cautious, with a focus on potential rebounds in glass production [5].

Investment Rating - The report rates the chemical industry as "Outperform the Market" [1] Core Views - The report suggests focusing on undervalued leading companies in the industry, the impact of "anti-involution" on supply in related sub-industries, and the importance of self-sufficiency in electronic materials companies amid strong downstream demand and price increases in certain new energy materials [1][11] Summary by Sections Industry Dynamics - In the week of December 29 to January 4, 32 out of 100 tracked chemical products saw price increases, 29 saw declines, and 39 remained stable. The average price of 51% of products increased month-on-month, while 39% decreased, and 10% remained unchanged [10][30] - International oil prices rose slightly, with WTI crude oil futures closing at $57.32 per barrel, a weekly increase of 1.02%, and Brent crude oil futures at $60.75 per barrel, a weekly increase of 0.18% [10][31] Investment Recommendations - As of January 4, the TTM price-to-earnings ratio for the SW basic chemical sector is 25.69, at the 76.92 percentile historically, while the price-to-book ratio is 2.33, at the 61.13 percentile historically. The SW oil and petrochemical sector has a TTM price-to-earnings ratio of 13.92, at the 41.86 percentile historically, and a price-to-book ratio of 1.35, at the 46.17 percentile historically [11] - Recommended stocks include Wanhua Chemical, Hualu Hengsheng, Satellite Chemical, and others, with a focus on companies in emerging fields such as semiconductor materials, OLED materials, and new energy materials [11][19] Price Changes of Key Products - Glyphosate prices decreased to an average of 23,596 CNY/ton, down 2.50% week-on-week and 0.05% year-on-year. The market remains oversupplied with weak demand [32] - Epoxy propane prices fell to an average of 7,785 CNY/ton, down 3.89% week-on-week. The industry operating rate is 63.73%, a decrease of 2.42 percentage points [33] Market Performance - The basic chemical industry experienced a decline of 0.27% in the week, ranking 14th among 31 primary industries, while the oil and petrochemical industry rose by 3.92%, ranking 1st [10][11]

Group 1 - As of December 25, 2025, the total inventory of domestic soda ash manufacturers is 1.4385 million tons, a decrease of 61,900 tons from the previous week, representing a decline of 4.13% [1] - Light soda ash inventory is 735,500 tons, an increase of 6,300 tons week-on-week, while heavy soda ash inventory is 703,000 tons, a decrease of 68,200 tons [1] - On December 25, the price of light soda ash from Jiangsu Kunshan Jinggang decreased to 1,350-1,370 RMB/ton, while Jiangsu Jingshen Chemical's light soda ash price remained stable at 1,300 RMB/ton [1] Group 2 - According to Caixin Futures, the demand for heavy soda ash is negatively impacted by the decline in float glass production, with the annual demand growth expected to be slightly negative [3] - Light soda ash demand is anticipated to continue growing due to the expansion of lithium carbonate production capacity and improved exports, although the large base of soda ash production capacity will pressure cost lines [3] - Zhengxin Futures indicates that short-term commodity sentiment is decent, but fundamental changes in soda ash remain limited, with a mid-term trend expected to maintain a bearish outlook amid a supply surplus [3]

Core Viewpoint - The soda ash futures market continues to show a strong trend, with the main contract reaching 1192.00 CNY/ton, a significant increase of 2.05% [1] Industry Summary - As of December 18, 2025, the total inventory of domestic soda ash manufacturers is 1.4993 million tons, an increase of 0.005 million tons from the previous week, reflecting a growth rate of 0.33% [2] - The total inventory of domestic soda ash enterprises is 1.386 million tons (including some external warehouse inventories), which is an increase of 0.012 million tons from December 11, with a growth rate of 0.9% and a year-on-year decrease of 12.4%. Among this, the heavy soda ash inventory is 644,000 tons, which has decreased by 0.002 million tons, a decline of 0.3% [2] Institutional Perspectives - According to Jianxin Futures, the soda ash market is currently in a situation of strong supply and weak demand, with high inventory pressure that is difficult to resolve quickly. Although cost support is gradually emerging, the driving force remains limited. Without significant changes in the supply-demand structure, prices are expected to continue fluctuating at low levels, with a cautious approach recommended towards rebound trends [4] - According to Wukuang Futures, as enterprises resume production and new capacity in the Alashan region is expected to be released, market supply pressure is gradually becoming apparent. Downstream demand has not shown significant improvement, with procurement mainly focused on just-in-time inventory replenishment, leading to low stocking willingness. Additionally, increased cold repairs in glass production lines further suppress demand for soda ash. In the short term, without significant positive stimuli, soda ash prices are expected to remain under pressure [4]

Core Viewpoint - The domestic soda ash market is currently experiencing a stable yet fluctuating trend, with prices remaining steady across various regions, but overall market sentiment is cautious due to supply pressures and weak demand [2][5]. Price Summary - Light soda ash prices in North China are stable at 1220-1320 CNY/ton, while heavy soda ash prices range from 1160-1320 CNY/ton [2]. - In East China, light soda ash prices are between 1200-1620 CNY/ton, and heavy soda ash prices are at 1260-1320 CNY/ton [2]. - Other regional prices for light and heavy soda ash remain unchanged, indicating a lack of significant market movement [1][2]. Market Dynamics - The industry is facing a supply surplus due to limited new maintenance and a slight increase in operational load from some facilities [2]. - Downstream enterprises are primarily purchasing based on essential needs, showing low acceptance of high-priced soda ash, leading to a cautious market atmosphere [2]. - The recent performance of new orders from manufacturers has been mediocre, contributing to a lack of strong market support [2]. Price Index Analysis - As of December 10, the light soda ash price index is at 1202.86, remaining unchanged from the previous working day, while the heavy soda ash price index has decreased by 4.29 to 1197.14, reflecting a decline of 0.36% [3]. Futures Market - On December 10, the main soda ash futures contract SA2601 opened at 1123 CNY/ton and closed at 1094 CNY/ton, marking a daily decline of 2.93% [5]. - The market is under pressure due to new capacity coming online and the recovery of previously reduced production facilities, particularly the Alashan natural soda project, which has negatively impacted market sentiment [5]. - The overall industry fundamentals remain weak, compounded by a downturn in the downstream glass market, leading to a cautious trading environment [5]. Future Outlook - The industry is expected to see a slight increase in soda ash supply due to concurrent maintenance and resumption of production [6]. - Demand remains subdued, with companies primarily maintaining essential purchases, resulting in low trading activity [6]. - The soda ash market is anticipated to remain in a narrow range, with close attention needed on production dynamics and downstream inventory replenishment [6].

Core Viewpoint - The soda ash industry is facing challenges due to oversupply and weak demand, necessitating a shift from price competition to value competition through technological advancements and green manufacturing practices [1][4][5]. Group 1: Supply and Demand Dynamics - By 2025, the soda ash market is expected to experience a supply surplus and weak demand, with high inventory levels indicating a cyclical adjustment phase [2]. - Domestic soda ash production capacity is projected to exceed 40 million tons by 2024, with a production increase of 493.1 million tons year-on-year in the first three quarters of this year [2]. - The core downstream demand for soda ash comes from float glass, which accounts for 35%-40% of total demand, but new construction in the real estate sector has declined, limiting growth [2]. Group 2: Inventory Trends - Starting from March 2024, soda ash inventory rose from 400,000 tons to a peak of 1.9 million tons, stabilizing above 1.4 million tons [3]. - As of November 27, the total inventory of soda ash manufacturers was 1.409 million tons, with delivery warehouse inventory at 583,800 tons [3]. Group 3: Competitive Landscape - The industry is facing intensified homogenization, with some companies resorting to price competition, which has compressed overall profit margins [4]. - The price of heavy soda ash peaked at 3,681 yuan per ton in October 2021, but has since fluctuated between 1,218.57 and 1,344.29 yuan in the third quarter of this year [4]. - Natural soda ash is gaining market share due to its cost advantages, increasing from 5% in 2022 to 17% in 2025, positioning it favorably against other production methods [4]. Group 4: Path to Value Competition - The industry must transition from price competition to value competition, emphasizing technological and service upgrades to enhance competitiveness [5]. - There is a pressing need to develop high-value products for high-end sectors like renewable energy, which currently lack sufficient production capacity [5]. - Innovations in clean production methods and resource utilization are being prioritized, with companies exploring technologies such as using industrial waste salt for soda ash production [5]. Group 5: Collaborative Ecosystem and Global Expansion - Companies are shifting from independent operations to collaborative ecosystems, with industry leaders like China Salt Group leading initiatives to foster innovation through partnerships [6]. - Chinese soda ash production technology is being exported globally, exemplified by the launch of Indonesia's first soda ash project utilizing Chinese methods, contributing to the diversification of the global soda ash supply chain [6]. - The future of China's soda ash industry lies in enhancing high-end product supply, promoting green processes, and integrating value chains to establish a competitive edge in the global market [6].