Drainage pipe demand is expected to rise rapidly

Recently, heavy rains in the South have caused large-scale accumulation of water in many cities. In response, Xinhua News Agency published an article entitled “Every Rain Rains to Torture Urban Construction Management”. The article believes that urban planning and construction and managers need to carefully reflect and wake up under the background that many problems are constantly being highlighted. We believe that the severe water accumulation in southern cities triggered by the heavy rainfall will prompt the government to increase investment in municipal water supply and drainage facilities and urban pipe network construction.

Our research shows that the management of flood control and drainage in Chinese cities is weak, and flood control facilities are not perfect. At present, 59% of the 642 cities with flood prevention tasks in China do not meet the national flood control standards, and the flood drainage standards are not high. Every year during the flood season, there are a large number of cities flooded and flooded with water, seriously affecting social and economic life. In the process of accelerating urbanization in China, the construction of water supply and drainage has lagged behind other urban construction indicators.

Specifically, the penetration rate of urban drainage network in China is still low. At present, the penetration rate of urban drainage networks in China is about 64.8% according to the service area, the total length of drainage pipelines is more than 110,000 kilometers, and the length of drainage pipes per capita is 0.55 meters, which is a big gap compared with industrial developed countries. Our research finds that the construction of domestic urban pipe network has accelerated in the past 15 years. However, the overall pipe network penetration rate in China is still low, which is still 7 times the gap between the per capita level in developed countries and the industry market is vast.

【Investment Advice】

We believe that the severe water accumulation in the southern cities caused by the heavy rainfall has sounded a warning to the local government. In the future construction of the city, it will prompt the government to increase investment in municipal water supply and drainage facilities and urban pipe network construction. Demand for plastic pipes (HDPE pipes, PE pipes, etc.) is expected to rise rapidly. At present, the annual growth rate of plastic pipe in China has reached 15%, and the growth rate in 2009 has reached 21.6%. The growth rate ranks first in the world, and the range of product use is increasing. The wider, the current industry concentration is low, and some leading companies are expected to grow in the future.