In the near future, the increase of the load of some main chlorine consumption units has supported the liquid chlorine market, while the cost of chlor-alkali enterprises has not changed much, the comprehensive profit level has increased, and the production enthusiasm of chlor-alkali enterprises is high. However, the downstream enterprises of Caustic Soda are in a slow recovery state after the holiday, and the overall demand performance is less than expected, and most enterprises maintain the purchase on demand. At present, the overall inventory of the caustic soda industry is at a historical high level, and the supply and demand of caustic soda remains weak and the price continues to decline due to the impact of the lack of periodic export orders. As the peak season of demand for "gold, silver and four" traditional industrial products is approaching, we should pay attention to the replenishment demand of downstream caustic soda enterprises after the resumption of work.
Large scale of planned production
According to the data, as of February 16, the inventory of domestic sample enterprises (capacity accounting for 70%) was about 418100 tons, with a month-on-month increase of 1.93% and a year-on-year increase of 100.05%. At present, the inventory is at a historical high level, and the enterprise's inventory pressure is high, while the comprehensive gross profit of chlor-alkali enterprises is acceptable. Taking the main producing area of Shandong as an example, the weekly gross profit of chlor-alkali enterprises was 830.5 yuan/ton last week, and the daily gross profit rate was 28.04%. At present, the price of caustic soda is weak, and the profit of chlor-alkali enterprises is rising, mainly due to the rise of liquid chlorine price. Under the condition that the willingness to start the chlorine consumption plant is improved, the comprehensive operating rate of chlor-alkali enterprises will still maintain a high level in a phased manner. Although some regions have periodic maintenance expectations, from the perspective of the monthly production of caustic soda in recent years, enterprises have relatively high enthusiasm for production from March to May. In addition, the comprehensive production profit of chlor-alkali enterprises is good, and it is estimated that the short-term supply of goods is sufficient. The recovery progress of the downstream demand of caustic soda becomes the key to effectively alleviate the inventory pressure. In addition, in the medium and long term, there are still 3.975 million tons of new capacity planned for production of caustic soda in 2023, with a capacity growth rate of about 8.5%. The planned production scale is large. Against the background of expected decline in exports, the growth of domestic demand is particularly important.
Downstream domestic demand recovery is slow
The downstream consumption of caustic soda mainly includes alumina industry, printing and dyeing chemical fiber industry, chemical industry, paper industry, etc. Among them, alumina accounts for the largest proportion, about 29.3%. In recent years, the capacity of alumina industry has expanded rapidly. In 2022, nearly 10 million tons of new capacity will be added. In 2023, it is expected that 4.1 million tons of new capacity will be added. One ton of alumina corresponds to about 0.15 tons of caustic soda demand. The rapid production of alumina will form a certain support for the demand for caustic soda. In this context, the profits of the alumina industry have been compressed, the overall operating load has increased slowly since the holiday, and the enthusiasm for caustic soda procurement is not high. The start of the printing and dyeing chemical fiber industry has recovered seasonally. The printing and dyeing factory has basically been in normal production status, and the start of construction has increased rapidly. However, the orders are mainly supplemented in winter. The new orders in spring and summer are expected to arrive in late February and early March.
Expected fall in export orders
In 2022, the caustic soda market as a whole remained relatively strong, partly due to the obvious increase in exports. According to the data, the total export volume of caustic soda in 2022 was 3.214 million tons, with a year-on-year increase of 216.8%. China is the world's largest producer of caustic soda, followed by North America and Europe. China's caustic soda production capacity accounts for about 45.5% of the global total production capacity, and its output accounts for about 48.9% of the global total production. Since 2011, China's caustic soda exports have maintained an overall downward trend of oscillation, and the average annual export volume of China in the past five years has not exceeded 1.5 million tons. However, in 2022, the energy price in Europe and the United States was high, the production cost of caustic soda increased significantly, the operating load dropped sharply, and the caustic soda was in a state of oversupply.
The domestic caustic soda price advantage is obvious, the export profit space is large, and the export orders have increased significantly, even exceeding the level in 2011. However, in the second half of 2022, especially in the fourth quarter, the energy prices in Europe and the United States fell, the production costs of caustic soda decreased, and the external price also fell, but the recovery of the external device still took time. We expect that China's caustic soda export will fall to a certain extent in 2023, but it will still be higher than the average level in recent years.
In general, the supply of caustic soda in the short-term market is sufficient, and the inventory pressure of enterprises is high, while the recovery of domestic demand in the downstream is slow, the export boost is limited, and the situation of supply exceeding demand is maintained at a stage. It is expected that the price of caustic soda will remain weak, but the traditional peak season of "gold, silver and four" will come, and the supply pressure will gradually ease after the recovery of demand. In the medium and long term, under the situation of double increase of supply and demand, the focus will be on the recovery of demand and the progress of new caustic soda production capacity. At the same time, as the largest chlorine consumption PVC in China, it has a great impact on the marginal cost of chlor-alkali - PVC industry. It is necessary to continue to pay attention to the impact of the change in the marginal cost of chlor-alkali - PVC industry on capacity utilization.
