Long term impact of environmental policies on the price of polyaluminum chloride

1. The long-term core mechanism of environmental protection policy to promote Pac price

Capacity supply is shrinking

The normalization of environmental restrictions has led to the exit of small and medium-sized production capacities. For example, in the Pac Production area of Gongyi, Henan, the price of Q1 increased by 10% in the short term due to environmental restrictions in 2025. In the long run, environmental inspections have eliminated low-end production capacities (such as low-purity products produced using the drum method), leading to increased industry concentration and stronger bargaining power for leading companies.

The entry threshold for new production capacity has been raised: the construction of new alumina production capacity is prohibited in key areas for air pollution prevention and control, and supply elasticity is curtailed.\

Production costs are rising

Process upgrading forces investment: Environmental requirements push enterprises to shift from drum drying method to plate and frame/dry spray drying method, which increases energy consumption cost by 40%, and requires supporting wastewater recovery system, which will increase unit cost in the long run.

Raw material green premium: the environmental protection standard of bauxite mining is improved, and the price fluctuation of bauxite is transmitted to the cost end of PAC.

Structural growth on the demand side

Upgrading of sewage treatment standards: Industrial wasteWater Treatment requirements are increased from 24% to more than 28%, driving high-end PAC demand, with a premium rate of 15%-30%.

Expansion of new energy industry: the demand for lithium power and photovoltaic wastewater treatment increased by 12% annually, and the gap between supply and demand of high-end PAC expanded.

Second, the specific manifestation of long-term price impact

Price stratification has intensified

Industrial PAC (24%-28%): The most affected by environmental protection production restrictions, the price range in 2025 is 1350-1850 yuan/ton, and the volatility is higher than other categories.

Drinking water/pharmaceutical grade PAC (more than 30%): Due to the strict environmental protection requirements of production process, the price has been stable at 2000-3000 yuan/ton for a long time, which has become a profit growth point for enterprises.

Regional price differentials widened

Cost differentiation between main producing areas and non-main producing areas: Henan maintains its price advantage by relying on cluster effect (5%-8% lower than northeast and south China), while areas that fail to meet environmental protection standards face higher transportation premium.

Restructuring of industrial chain profits

Upstream raw material enterprises benefit: alumina and hydrochloric acid suppliers gain bargaining power through green certification, and the environmental premium of alumina will reach 8%-12% in 2025.

Downstream user cost transfer: the procurement budget of municipal water enterprises increased by 7%-10% annually, forcing the adjustment of water pricing mechanism.

Third, future price trend prediction

Environmental policies are driving the PAC price in a dual manner, characterized by increased short-term volatility and a long-term trend of moderate growth. It is projected that by 2030, the annual increase in industrial-grade PAC prices will be between 3% and 5%, while high-end products are expected to see an increase of 6% to 8%. Companies need to mitigate cost pressures through process innovations, such as low-carbon spray drying technology, and supply chain optimizations, including diversification of bauxite imports.