Rising costs and inventory liquidation, caustic soda futures still have support

According to Chuangchuang Research, in the spot market, the price of 32% ion-exchange membrane caustic soda in Shandong is 689 yuan/ton, up 2 yuan/ton from the previous trading day. The overall low-grade caustic soda market in Shandong remains stable, with some companies continuing to raise prices supported by low inventory levels. Most companies are balancing supply and demand based on basic needs. High-grade caustic soda is relatively strong in the short term, supported by export orders.

In terms of supply, the average utilization rate of domestic sample enterprises producing over 100,000 tons of caustic soda is 83.9%, down 1.4% month-on-month. The total inventory at 20,000-ton-plus fixed liquid caustic soda plants nationwide is 500,700 tons (wet basis), down 6.28% month-on-month but up 20.22% year-on-year. Ongoing geopolitical conflicts and a shortage of olefins abroad are gradually expanding the scope of caustic soda production cuts, tightening overseas supply. Spot market inventories are relatively low, with some regions fulfilling 50% of orders, and new order prices are rising.

On the demand side, last week, downstream alumina operating rates decreased by 0.8 percentage points, and viscose short-fiber capacity utilization declined by 1.17 percentage points month-on-month. Recently, domestic alumina production has been recovering slowly, with new facilities awaiting commissioning, and non-aluminum demand remains driven by basic needs.

Opinion: Tensions in the Middle East are escalating, energy prices are rising again, providing strong cost support. Additionally, due to the impact of overseas plant shutdowns, export demand for caustic soda remains optimistic. It is expected that short-term caustic soda futures will remain volatile with a slight upward bias, with attention to overseas plant changes and the progress of new downstream capacity releases.