Caustic Soda Prices Rise Across the Board in August

August 29 update

I. Price Trends

According to monitoring data, the caustic soda market in China maintained a steady upward trend in August. At the beginning of the month, the average price of caustic soda in Shandong region was 861 CNY/ton, and by the end of the month, the price in Shandong had risen to 884 CNY/ton, an increase of 2.67%, and a 7.41% increase compared to the same period last year. On August 28, the chemical index stood at 771 points, down 1 point from the previous day, a decrease of 44.93% from the highest point of 1400 points (on October 23, 2021), and an increase of 28.93% from the lowest point of 598 points on April 8, 2020. (Note: The cycle refers to the period from December 1, 2011, to the present.)

2. Market Analysis

According to the survey data, the caustic soda prices are generally firm. In Shandong, the mainstream market price for 32% ion-membrane caustic soda is around 840-910 CNY/ton. In Jiangsu, the caustic soda prices are stable, with the mainstream market price for 32% ion-membrane caustic soda around 870-950 CNY/ton. In Inner Mongolia, the caustic soda prices are stable, with the mainstream market price for 32% ion-membrane caustic soda (converted to 100%) around 2700-2800 CNY/ton. This month, the caustic soda prices have increased. In the Shandong region, the prices of caustic soda have risen. The previously shut-down facilities have not yet resumed operations, and the inventory pressure on enterprises is not significant. The major downstream enterprises have raised the purchase price of liquid caustic soda, leading to an increase in the regional liquid caustic soda prices. Alumina is mostly purchased as needed, and non-aluminum buyers also mainly purchase according to their needs.

Analysts believe that recently, the price of caustic soda has shown a slight increase, with firm prices. Domestic demand in China has been decent, and caustic soda producers are not facing significant inventory pressure. There is an expectation of maintenance by downstream companies. Next week, plants in the northwest and southwest regions will resume operations after maintenance, leading to an increase in production capacity. In the north and east regions, there will be a reduction in production cuts, resulting in a slight increase in capacity. Overall, considering the balance between supply and demand, it is expected that the price of caustic soda will maintain a stable trend, depending on the specific demand from downstream markets.