Doubling prices in less than three months Caustic soda has entered a "tight balance"?

Reporter Li Yong

Hangjin Technology disclosed information on the evening of September 22, affected by market factors, the company's main product caustic soda (each concentration) price increased comprehensively, on the basis of the existing caustic soda sales price, domestic customers discounted the sales price of 1320 yuan / ton in the past week, a cumulative increase of about 51%.

Tight supply and demand Prices rose

"The price of caustic soda rose suddenly in the second half of this year, almost one price a day." Some relevant people in chemical companies told reporters.

The reporter inquired about the caustic soda quotation of dealers on the website of the business agency shows that on September 23, the highest quotation of 99.0% min tablet alkali was 5000 yuan / ton, and the quotation of 32% specification liquid alkali was about 1100 yuan / ton. The relevant person of the chemical enterprise told reporters, "More than a week ago, the price of 32% liquid alkali was only six or seven hundred yuan a ton, and the price has been rising recently." ”

Caustic soda scientific name sodium hydroxide, also known as caustic soda, can be used as acid neutralizer, with masking agent, precipitant, precipitation masking agent, color developer, saponifier, peeling agent, detergent, etc., very widely used, is an important basic inorganic chemical raw materials. For the recent sharp rise in the price of caustic soda, Li Pengyan, founder of New Hotspot Wealth, told reporters that in recent years, the new production capacity of caustic soda has been limited, coupled with the recent tightening of the dual control policy of energy consumption in many places, resulting in a decrease in upstream supply, while the downstream market demand is strong, resulting in this wave of price increases.

The reporter noted that on July 23, 2016, the General Office of the State Council issued relevant guidance on the restructuring of the petrochemical industry to promote transformation and efficiency, pointing out that efforts should be made to resolve excess capacity and strictly control the new capacity of excess industries, including caustic soda. The Catalogue for the Guidance of Industrial Structure Adjustment (2019) issued by the National Development and Reform Commission on October 30, 2019 also lists new soda ash (except for underground circulating alkali and natural alkali) and caustic soda (except for ionic membrane caustic soda devices for the comprehensive utilization of waste salt) as restricted categories. According to relevant statistics, the capacity growth rate of the caustic soda industry in 2016-2020 has always remained below 5%, and the capacity utilization rate of the industry has steadily increased to about 80%.

It is worth noting that since the beginning of this year, the export of caustic soda has also been very strong, especially in June, and the export volume has increased significantly. According to the statistics of the General Administration of Customs, in the first half of this year, the domestic liquid alkali export volume was 423,300 tons, an increase of 129.21% year-on-year, of which the monthly export volume in June was 136,300 tons, an increase of 455.87% year-on-year and 131.15% month-on-month.

The steady growth of downstream demand and the substantial increase in export demand have made the caustic soda market suddenly tight. According to a related research report released by Kaiyuan Securities, since May this year, the inventory of tablet alkali and liquid alkali has continued to decline. According to the information on the website of the business agency, as of September 18, the inventory of the caustic soda industry has been at the lowest level in nearly a year. According to the relevant price data published on the website, the process is ion exchange membrane method, and the price of 32% liquid alkali with a quality grade of first-class product has risen from 517 yuan / ton on June 25 this year to 1080 yuan / ton on September 23, an increase of 108.9%, less than three months, the price has doubled.

Or enter a tight balance between supply and demand

For this price adjustment, Hangjin Technology said in the announcement that the company will closely track the trend of caustic soda prices and changes in supply and demand, and timely do a good job in adjusting the prices of caustic soda products. The overall increase in the sales price of the main products will help further enhance the company's sustainable profitability and help improve the company's market position and influence. After this price adjustment, the duration of the new sale price cannot be determined, and there is a risk of product price fluctuations.

For the market situation of caustic soda, another large production capacity of Zhongtai Chemical said in the 2021 semi-annual report that the overall supply and demand of caustic soda in the first half of the year gradually shifted from oversupply to supply and demand balance, and the possibility of tightening supply was not ruled out in the future. In the company's investor relations activity record table disclosed in early September, Zhongtai Chemical mentioned that due to the decline in overseas high temperatures in July and August, the export of domestic caustic soda enterprises increased, the overall social inventory declined, and there was a tight balance between supply and demand. With the rise in the price of electrolytic aluminum, the operating rate of the alumina industry with the largest demand for caustic soda downstream has risen, coupled with the impact of calcium carbide tension and maintenance and other factors, the supply of caustic soda has decreased, and with the continuous expansion of downstream application fields, the demand has continued to rise, and it is expected that the price of caustic soda will be stable and upward in the second half of the year.

"In the context of carbon neutrality, the expansion of caustic soda is limited, the demand is stable and rising, and the industry may open a tight balance between supply and demand." Kaiyuan Securities believes in the relevant research report that the key to achieving carbon neutrality lies in the supply side, and it is expected that the new production capacity of the caustic soda industry will be limited in the future under the high pressure of the policy, while the downstream alumina and other emerging industries have broad demand, which will drive the demand for caustic soda to increase steadily. Based on the impact of the carbon neutrality strategy on the supply and demand side of caustic soda, Kaiyuan Securities expects that there will be a supply and demand gap of about 400,000 tons in 2025, and the production/apparent consumption of caustic soda will gradually decrease from 102.53% to 99.04% in 2021-2025, and the industry will gradually enter a tight balance between supply and demand.

"Caustic soda has been included in the restricted development industry, and the increase in production capacity in recent years has been relatively limited, and the disorderly production capacity in the industry with small scale, backward technology and poor quality level will also be gradually cleaned up and standardized." Li Pengyan believes that with the continuous recovery of the global economy, the demand for caustic soda will further improve. In the context of carbon neutrality, high-quality stock assets in the industry will also become scarce resources, and these head enterprises with resources, costs, technology, markets, scale and other advantages can also take advantage of this to further enhance competitiveness and improve the industry's production capacity structure.

(Edited by Cui Man, Shangguan Monroe)