Caustic soda: demand continues to be high

Since late May, the domestic caustic soda market has risen rapidly, showing a unilateral upward trend for two consecutive months
.

On August 4, the market reference price of 32% liquid caustic soda was 647.

The industry generally believes that the short-term caustic soda market will continue to operate at a high level under the guidance of the continued improvement of major downstream demand such as alumina and the shrinking of the supply side of caustic soda
.

Downstream demand continues to increase

　Downstream demand continues to increase　downstream demand continues to increase

In recent years, the downstream demand for domestic caustic soda has continued to rise, and the consumption in 2020 will reach 35.
32 million tons, an increase of 5.
21% over the previous year
.

In particular, the operating rate of the main downstream alumina industry continues to rise, driving up the market price of caustic soda from the demand side

The alumina industry is one of the main application areas of caustic soda, with consumption accounting for 32%
.

After the impact of the epidemic in 2020, international aluminum prices have rebounded from the bottom, and the operating rate of the alumina industry has risen, driving up the demand for caustic soda

"Since this year, the operating rate of the alumina and viscose industries has continued to rise, driving the increase in demand for caustic soda
.

" According to Yang Hui, an analyst at Western Securities and Chemicals, the cumulative output of alumina from January to June was 36.

The market performance of viscose staple fiber is also remarkable
.

In the past week, the domestic production of viscose staple fiber was 68,500 tons per week, and the operating rate was 70.

　　"Recently, as the overseas epidemic situation has become more serious, especially in Southeast Asian countries, orders from the textile and chemical industries have begun to return to China
.

The surge in orders has further stimulated the demand for caustic soda.

　　Overhaul centralized supply reduction

　Reduction of　centralized overhaul supply

　　Driven by major downstream demand such as alumina, the center of gravity of caustic soda prices has moved up overall, and the shipments of manufacturers have been smooth, with strong bullish sentiment
.

Driven by high profits, enterprises are more motivated to produce, and the operating rate of the caustic soda industry has been maintained at a high level of over 80%

　　According to Ning Zhi, the marketing director of a caustic soda enterprise in Shandong, from the perspective of supply, most of the equipment in North China and Northwest China has been overhauled recently, and the overhaul period has been long, the industry operating rate has been reduced, and the supply in some markets has decreased
.

In Shandong alone, companies such as Yantai Wanhua, Dongying Hebang, Shandong Jinling, and Shandong Haihua have entered the maintenance period

　　New capacity expansion is limited

　Restricted　expansion of new capacity 　 Restricted expansion of new capacity

　　The chlor-alkali industry is a high-pollution, high-energy-consuming industry, and the pressure on environmental protection is relatively high
.
In the context of China's promotion of "carbon peak and carbon neutrality", the pace of capacity expansion in the chlor-alkali industry has been restrained
.

　　At present, the primary problem facing China's chlor-alkali industry is environmental protection.
Not only does the production process consume a lot of electricity, but also when the calcium carbide method is used to produce PVC, the crushed calcium carbide will produce dust, the calcium carbide slag will be generated after the calcium carbide reaction, and the use of mercury-containing catalysts will Bring mercury pollution
.
For this reason, the National Development and Reform Commission has issued the "Access Conditions for Chlor-Alkali (Caustic Soda, PVC) Industry", which puts forward clear access standards and requirements for new and expanded chlor-alkali production capacity
.
In recent years, increasingly stringent environmental protection regulatory measures have further restricted the release of production capacity in the chlor-alkali industry.
In the future, new production capacity in the industry will face a higher threshold, forcing technological innovation and environmental protection upgrades in the industry
.

　　In 2020 and 2021, the chlor-alkali industry's capacity growth rate will only be 3% and 0.
8%
.
In the next two years, the known planned new production capacity includes Shanghai chlor-alkali 300,000 tons/year, Wanhua Fujian 300,000 tons/year, Jinqiao Yihai 150,000 tons/year, Jiangxi Jiuhong 150,000 tons/year, Minxiang Chemical 150,000 tons/year, Anhui East to Guangxin 150,000 tons/year, Anhui Bayi Chemical 100,000 tons/year and Yangnong Chemical 150,000 tons/year, totaling about 1.
5 million tons/year, the average growth rate of production capacity is only 1.
6%, which is significantly lower than the industry's demand growth rate in the past few years.
It is expected that the supply of caustic soda will remain tight in the next two years
.

　　In summary, in the short term, the caustic soda market has seen rapid growth in the early stage and will continue to rise slightly.
However, supported by positive factors such as continued strong demand, overseas orders backflow, and some corporate equipment maintenance, the market outlook may still run at a high level
.