【 Quarterly Report 】 Sodium hydroxide liquid caustic soda market trend CAS NO. 1310-73-2

The quarterly report indicates a weak trend in the sodium hydroxide liquid caustic soda market for the third quarter, with a continuation of this downturn expected in the fourth quarter. CAS NO. 1310-73-2.

In the third quarter, the price of liquid caustic soda was weak, with the peak season not exhibiting strong demand. In the fourth quarter, a slight decrease in supply is expected to be followed by a recovery, while demand gradually weakens, and prices are anticipated to fluctuate slightly before declining.

【Price Review】
In the first half of July and from late August to the first half of September, prices increased, with a downward trend in the interim period. During the second half of September, prices fluctuated. Most of the time, the price of liquid caustic soda was slightly higher year-on-year, although the overall price performance remained relatively weak. Throughout the quarter, price fluctuations were minimal, indicating that the peak season was not particularly robust, and there was no significant decline in prices during the off-season. Taking the Shandong region as an example, as of September 25, the average price of 32% liquid caustic soda in the third quarter was 115.33 USD/ton, reflecting a 5.27% increase compared to the average price of 109.55 USD/ton in the same quarter last year. The price difference between high and low was 9.6 USD/ton, compared to a price gap of 38.81 USD/ton in the third quarter of the previous year.

【Demand Side】
From a phased perspective, July and August traditionally represent a low season for caustic soda demand, leading to a decrease in downstream requirements. However, during the first half of July, there was a concentrated maintenance period for several caustic soda production facilities, which caused a temporary price increase. As maintenance concluded in the latter half of the month and demand weakened, prices declined. The downtrend continued into early to mid-August, whereas both July and August typically experience reduced liquid chlorine demand. The liquid chlorine market exhibited lackluster year-on-year performance, occasionally requiring subsidies. Under a scenario of dual weakness in caustic soda and chlorine sales, chlor-alkali enterprises faced poor profitability, with some even incurring losses. Compounded by difficulties in liquid chlorine deliveries and off-peak production adjustments, some businesses opted for reduced operational output while attempting to uphold liquid soda pricing. During the first half of July through August, the national sample chlor-alkali enterprises saw a continuous decline in weekly operational load rates, reaching a low of 80.91%, down 6.05 percentage points compared to the end of June. Consequently, price reductions for liquid soda are limited under a production cut to maintain pricing stability.

【 Supply Analysis 】
With the reduction in production loads and lower pricing, the inventory pressure on chlor-alkali enterprises has gradually eased. By late August, prices in regions such as Shandong, Hebei, and East China began to rebound. Surrounding markets and parts of South China followed suit, leading to an increase in prices. In the first half of September, there was a slight pickup in activity among some downstream sectors. Coupled with the relatively low inventory levels of chlor-alkali enterprises, sporadic reductions in production loads, maintenance, and unscheduled shutdowns provided an uplift, resulting in small price increases in most areas. However, there has been no significant recovery in downstream operations. Moreover, there were fewer maintenance activities among chlor-alkali enterprises in September, and certain enterprises increased their production loads, contributing to a rise in liquid caustic soda supply. The supply-demand imbalance remains evident, preventing any substantial price hikes. In the second half of the month, some markets experienced slight price increases due to maintenance and production cuts, along with low inventory levels. Conversely, other markets saw minor declines in prices due to weak demand and increased supply. Overall, price fluctuations varied across different markets.

【 Related Product Analysis 】
1. PVC: This week, the domestic PVC powder market experienced fluctuations and a decline, with a downward shift in price focal points. As of September 19, the domestic acetylene-based PVC powder SG-5 decreased by 56 CNY/ton compared to the previous period, marking a drop of 1.06%, and the weekly average price continued to decline. The primary factors affecting market trends include persistent weak fundamentals; this week saw a reduction in maintenance among enterprises and an increase in industry operating load rates, leading to some phase-specific inventory accumulation in domestic demand. Additionally, the macroeconomic environment was relatively weak in the first half of the week, with poorer-than-expected real estate data and social financing and credit statistics released during the holiday period.

2. Liquid Chlorine: This week, demand has slightly increased, and market transactions have been satisfactory, leading to stable or rising closing prices. Due to the holiday period, the willingness of buyers and sellers to negotiate was low in many regions, resulting in primarily stable prices. Furthermore, in some areas, initial transaction volumes were acceptable, but subsequent shipping pressures led to prices rising initially and then falling. For example, in the Shandong region, as of Thursday this week, the mainstream ex-factory price for liquid chlorine from tank cars increased by 17.73 USD/ton compared to last Thursday’s closing average, with a weekly average price of 9.79 USD/ton, reflecting a 93% increase over the previous week’s average price.

【 Q4 Future Outlook of Sodium Hydroxide Liquid Caustic Soda Market 】
In the fourth quarter, it is anticipated that market prices may experience a slight increase in October before declining, while other markets may stabilize narrowly before decreasing.

From the supply side, most caustic soda enterprises are not scheduled for maintenance in October; however, certain plants in Shandong, Hubei, Jiangsu, and Tianjin plan maintenance, which may provide some support to local prices. The maintenance plans in Shandong are relatively extensive, resulting in a noticeable short-term uplift in prices for Shandong and the surrounding areas. In contrast, the overall supply in other regions is expected to be abundant. In November and December, fewer caustic soda enterprises will undergo maintenance, possibly due to subpar liquid chlorine shipments and losses leading to reduced operational loads. Nonetheless, the overall operational load is expected to remain relatively high, ensuring adequate supply.

From the demand side, the largest downstream alumina faces restrictions due to the tight bauxite supply, making it challenging for operational load rates to improve further. By the end of October, some alumina enterprises in Shandong may introduce new capacity, but an equivalent capacity is expected to be phased out afterward, limiting market stimulation. After November, northern regions will enter the heating season, leading to expectations of declining operational loads at certain alumina enterprises in the north. There are no significant changes anticipated in the operational status of non-aluminum downstream industries in October, and from November to December, some downstream sectors are expected to enter a demand lull due to temperature factors, leading to a reduction in operational loads and decreased caustic soda demand. Overall, the expected change in demand for October is minimal, remaining lukewarm, with a gradual decrease expected in November and December.

From the perspective of the alkali-chlorine balance, liquid chlorine demand is expected to remain relatively stable in October. However, some markets may experience an increase in liquid chlorine prices due to reduced supply, although the increase is expected to be limited. The profitability of chlor-alkali enterprises may see slight improvement, potentially diminishing their inclination to maintain liquid chlorine prices. Nevertheless, in November and December, liquid chlorine prices are anticipated to decline due to the demand lull and adverse weather conditions, which may lead to declining profitability for chlor-alkali enterprises. As a result, caustic soda will experience more pressure on profitability, while chlor-alkali enterprises are expected to strengthen their pricing strategies, thereby limiting the extent of the decline in liquid chlorine prices.

In summary, certain markets may see temporary price increases due to supply-side maintenance in October, but as maintenance concludes, prices are expected to fall. Some markets will show no significant supply fluctuations, with lukewarm demand leading to a narrow consolidation of prices followed by a decline. From November to December, demand is anticipated to decrease while supply remains ample, intensifying the supply-demand imbalance.