Huatai Futures: Caustic soda export orders improve, supporting prices; supply and demand slightly improve month-over-month but with limited improvement

The market is rebounding strongly; international geopolitical conflicts have disrupted overseas supply. Caustic soda export orders are improving, export prices are rising, and this provides support for high-concentration caustic soda prices. After the aluminum seasonality post-holiday, operating rates have recovered and purchases for real demand have increased. However, at present in Shandong, spot prices for 32% caustic soda are mainly stable, and low-priced warehouse warrants exert some pressure on market sentiment. Downstream operating rates for liquid chlorine have recovered; liquid chlorine prices have risen, weakening cost support. On the supply side, operating rates have inched up, remaining high year over year; more companies are scheduled for maintenance in the mid-to-late March period. On the demand side, pickup sentiment is average; inventories of caustic soda in Shandong and Jiangsu are building up. Some maintenance at alumina plants has led to a slight decline in operating rates, and “re-arbitraging” in alumina has intensified competition, which causes expectations for forward demand for caustic soda to decrease. In Guangxi, the commissioning schedule for alumina has been delayed, and the market is taking a wait-and-see approach to caustic soda procurement sentiment. In Henan, Shanxi, and Guangxi, March liquid caustic soda procurement prices are stable. Overall, caustic soda supply and demand have slightly improved month-over-month, but the improvement is limited. International geopolitical conflicts have made the chemical sector relatively strong; caustic soda futures were at low levels earlier. After the two sessions, “re-arbitraging” intensified again, and with shorts exiting in a concentrated way, the futures market rebounded rapidly. Currently, high-concentration caustic soda prices are rising while low-concentration caustic soda prices are mainly stable; futures are trading at a relatively large premium. Focus should be placed on downstream procurement timing and changes in market sentiment. (Huatai Futures)