The caustic soda market is seeing a turnaround, and this phase is finally coming to an end

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The trend of continuous price increases for caustic soda, which had persisted for nearly a year, began to change. Over the past year, the price of caustic soda in China has reached new highs repeatedly; markets in most regions of the country, including North China, East China, and South China, have performed well. As prices kept rising, manufacturers experienced excellent sales performance, with many having low inventory levels or even no inventory at all. The main reasons for this, aside from reduced production volumes due to environmental inspections, are the strong support provided by alumina, the primary end-use product for caustic soda. Since last August, the price of 32% ion-exchange membrane caustic soda in North China has risen from around 740 yuan per ton to a peak of around 1380 yuan per ton, representing an increase of 86.4%. China has the world’s largest production capacity for caustic soda, at nearly 40 million tons per year, yet there is still a shortage of supply. This situation is unprecedented in China’s chlor-alkali industry over the past decade, and the extent of price increases during this period represents the highest levels ever recorded since the inception of this industry in China. 　　With the issuance of this year’s air pollution control targets for the 2+26 cities, along with the release of the specific implementation details, the issuance of emission permits for the thermal power industry is to be completed by the end of June ； By the end of October, complete the issuance of pollution discharge permits for the iron and steel and cement industries. Taking into account the characteristics of pollution emissions and the requirements of local emission standards, various regions were among the first in the country to initiate the issuance of emission permits for industries such as pharmaceuticals, pesticides, packaging and printing, and industrial coating. Complete the elimination of small coal-fired boilers by the end of October. Within the administrative regions of Beijing, Tianjin, Shijiazhuang, Langfang, Baoding, Jinan, and Zhengzhou, coal-fired boilers with a capacity of 10 steam tons or less, as well as tea stove boilers and commercial small coal boilers, have been virtually phased out. Coal-fired boilers of 10 steam tons or less will be completely phased out in the built-up areas of other cities as well as in county towns. Implement production control for electrolytic aluminum and chemical enterprises. Aluminum electrolysis plants across the country reduce production by over 30% during the heating season ； Alumina producers are cutting production by about 30% ； Carbon-related enterprises that fail to meet the special emission limits must cease operations entirely, while those that do meet these limits must reduce their production by more than 50%. The VOC emission processes in pharmaceutical companies involved in the production of active pharmaceutical ingredients, as well as those in pesticide companies that use organic solvents during production, should, in principle, cease operations during the heating season. Among the many industries mentioned above, alumina and electrolytic aluminum have a particularly significant impact on the domestic chlor-alkali market. As a result, before the production restrictions were imposed, most domestic alumina manufacturers increased their production levels and tried to raise the prices of raw materials they purchased; there was even a situation of frantic bidding for these raw materials. However, market experts understand that this represents the \"last frenzy\" in China’s chlor-alkali industry before the end of 2017. The production restrictions on alumina mean that the strongest support for caustic soda is gradually disappearing, and the domestic chlor-alkali market is likely to experience a sharp decline in prices. 　　On the 16th, the purchase price of alumina in Shandong region dropped by 50 yuan per ton. Many market participants believe this is an initial move by alumina manufacturers to keep lowering the prices of raw materials they purchase. Nevertheless, this decline has minimal impact on the current caustic soda market; in fact, manufacturers in Zhejiang region continue to maintain a strong sales pace. But this might just be the beginning. As alumina manufacturers reduce production, the excessively high market prices no longer have any support behind them. While prices are not likely to drop all the way to levels close to the cost threshold, it is quite possible that they will fall by around 400 yuan per ton by the end of December. The once-booming chlor-alkali industry is gradually coming to an end. . . . .