ShouChuang Futures: Ongoing geopolitical conflicts, overseas production cuts, caustic soda futures prices halt decline and rebound

In terms of supply, South Korea and Indonesia’s chlor-alkali operations have decreased, leading to a reduction of nearly 300,000 tons in caustic soda supply. Domestically, the planned maintenance of chlor-alkali plants in March has been implemented, which will reduce effective industry supply and strengthen market expectations for destocking of caustic soda.

On the demand side, recent aluminum oxide raw material prices have been weak, and the industry’s loss situation may improve. It is expected that aluminum oxide production will slightly increase, and new aluminum oxide capacity will be gradually put into operation from March to June. Additionally, as downstream non-aluminum industries gradually resume work after the holiday, the demand for liquid caustic soda will marginally improve. Overseas chlor-alkali plants are reducing production, which is expected to increase China’s caustic soda exports.

Overall, with the spring maintenance season approaching, domestic caustic soda supply is expected to decline. Overseas chlor-alkali plant reductions will decrease caustic soda supply and may boost China’s caustic soda exports. New domestic aluminum oxide capacities coming online will provide some support for caustic soda. In the short term, caustic soda futures are expected to remain relatively strong, with attention to overseas plant changes and the progress of new downstream capacity releases. (First Capital Futures)