First Capital Futures: The expected commissioning of new downstream facilities may limit the downside potential of caustic soda futures.

In the spot market, the average price of 32% ion-exchange membrane caustic soda in Shandong is 617 yuan/ton, up 4.40% month-on-month.
On the supply side, during the Spring Festival, affected by the difficulties in liquid chlorine sales, some enterprises in Shandong operated below capacity, and the inventory at caustic soda plants improved compared to pre-holiday expectations, with some low-inventory enterprises raising prices. This week, the average capacity utilization rate of domestic caustic soda sample enterprises with a production capacity of 100,000 tons and above is 84.9%, up 0.5% month-on-month. As downstream chlorine-consuming industries gradually resume operations, this will drive the recovery of chlorine-alkali plant loads and increase supply, with estimates that national chlorine-alkali loads will continue to rise to around 86% next week. After the holiday, overall inventories of enterprises remain high, with the inventory of fixed liquid caustic soda sample enterprises with a production capacity of 200,000 tons and above at 540,900 tons (wet tons), an increase of 22.13% month-on-month and an increase of 15.28% year-on-year.
On the demand side, this week the main downstream aluminum oxide production decreased by 0.3%, and the capacity utilization rate of viscose staple fiber remained flat month-on-month. After the holiday, some traders and downstream industries restocked due to just-in-time needs, but procurement in March may be limited due to sudden production cuts at Hebei aluminum oxide plants. There are expectations for new aluminum oxide production capacity to be released in March, so attention should be paid to the progress of new installations.
In summary, caustic soda enterprises are increasing production, supply remains high, and inventory continues to accumulate, while downstream demand is weak, putting pressure on caustic soda futures prices. The planned production of new aluminum oxide capacity in March may limit the downside potential for caustic soda futures prices, so keep an eye on the progress of new capacity releases. (CICC Futures)