Shouchuang Futures: Weak domestic demand weighs on caustic soda futures prices

Spot market: In Shandong, the price of 32% ion-exchange membrane alkali is 737 yuan/ton, up 9 yuan/ton from the previous trading day. In Shandong’s market, prices for low-grade alkali in the main producing areas have held steady as participants wait and see. On the demand side, there is no obvious increase in incremental buying; most transactions are driven mainly by just-need procurement. With support from export orders, high-grade alkali has been relatively strong in the short term.

On the supply side, Tianjin LGB Bohai Chemical’s chlor-alkali equipment with a capacity of 290,000 tons was shut down for inspection and maintenance on March 28, with restart timing to be determined. Last week, among domestic sample enterprises with caustic soda capacity of 100,000 tons or more, average capacity utilization was 84.6%, up 0.7% month-over-month. Shandong alkali producers are optimistic about the outlook and some factories have proactively increased inventories. For fixed caustic soda sample enterprises nationwide with 200,000 tons or more, plant inventory was 525,400 tons (wet tons), up 4.93% month-over-month and up 14.28% year-over-year. The weekly average gross profit for Shandong chlor-alkali enterprises was 323 yuan/ton, showing a clear improvement month-over-month. This week, chlor-alkali plants increased operating rates, so supply is expected to rise.

On the demand side, downstream alumina operating rates increased by 0.1%, and viscose staple fiber capacity utilization increased by 0.39% month-over-month. Recently, domestic alumina operating rates have recovered rather slowly; new alumina units are awaiting startup, and non-aluminum demand remains dominated by just-need buying. Domestic caustic soda exports have been running relatively smoothly, providing some support for demand for caustic soda.

In summary, domestic demand is on the weak side, and caustic soda futures prices are consolidating and adjusting. However, the geopolitical situation remains tense; overseas chlor-alkali units still have the possibility of being reduced. Export demand is relatively strong, which may limit the downside room for caustic soda futures prices. Pay attention to geopolitical developments, changes in domestic and overseas units, and the progress of new capacity additions downstream. (Founder Futures)