Core Viewpoint - The current core issue in the soda ash market has shifted from simple price fluctuations to a cost competition among different production processes [1][14]. Market Dynamics - As of December 16, 2025, the main contract for soda ash (SA401) closed at 1463 yuan/ton, down 2.66%, indicating ongoing volatility around the cost line [2]. - The price range of 1160 to 1190 yuan/ton has been observed, with total domestic soda ash inventory at 1.4943 million tons, remaining historically high despite a slight decrease in social inventory [5]. - The supply side has seen reduced operating rates due to losses and maintenance, while demand from the float glass industry has weakened due to ongoing losses [5][6]. Cost Structure - The production of soda ash is primarily divided into three processes: ammonia-soda process, soda-lime process, and natural soda process, with significant cost differences [14]. - The natural soda process can maintain costs below 1000 yuan/ton, while the soda-lime process has a cost center around 1050 to 1200 yuan/ton, and the ammonia-soda process exceeds 1300 yuan/ton [14]. - Companies using the ammonia-soda process are facing severe losses, leading to difficult decisions regarding production and maintenance [15]. Market Behavior - Low-cost producers are adopting strategies to increase market share, while high-cost producers are caught in a "prisoner's dilemma," where reducing production could lead to loss of market share [16]. - The industry consensus is forming around the need for high-cost capacity to exit the market to restore supply-demand balance [17]. Trading Strategies - The trading logic is evolving due to the lack of clear trends, with participants focusing on basis, price spreads, and process profits [19]. - Companies are shifting to dynamic and proportional hedging strategies, adjusting their positions based on price movements relative to production costs [20]. - The options market is becoming more active, providing new tools for companies and investors to manage uncertainty [21].

Core Viewpoint - The pure soda ash market is experiencing a tug-of-war around the cost line, with prices fluctuating between 1050 to 1200 RMB/ton, impacting the profitability of different production processes [2][10]. Market Dynamics - The main contract SA401 for pure soda ash has been trading in a narrow range, closing at 1126 RMB/ton on December 15, 2025, after hitting a low of 1094 RMB/ton a week earlier [2][3]. - The total inventory of domestic soda ash manufacturers was reported at 1.4943 million tons as of December 11, 2025, indicating high stock levels despite a slight decrease in social inventory [3]. - The supply side is facing challenges as some companies reduce production due to losses, while demand from the float glass industry is weakening due to ongoing losses and increased cold repair plans [3][4]. Cost Structure and Production Methods - The cost structure of soda ash production varies significantly among different methods: natural soda ash can be produced for under 1000 RMB/ton, while the dominant synthetic soda ash method has a cost center around 1050 to 1200 RMB/ton, and older ammonia-soda methods exceed 1300 RMB/ton [10][11]. - Companies using the ammonia-soda method are facing severe financial pressure, with some considering early maintenance shutdowns to mitigate losses [11][12]. Market Sentiment and Trading Strategies - Market sentiment is mixed, with participants oscillating between hope and reality, leading to a low-level wide fluctuation trend in prices [7][8]. - Traditional trend-following strategies are failing, prompting a shift towards more complex trading strategies focused on basis, price spreads, and production process profits [14][15]. - The market is seeing a rise in options trading as participants seek to hedge against volatility, with a notable increase in the use of dynamic and proportional hedging strategies [15][16]. Future Outlook - Analysts predict that the weak fundamentals of the soda ash market will continue, with expectations of a bearish trend in the short term due to persistent oversupply pressures [4][13]. - The industry consensus is forming around the need for high-cost production capacity to exit the market to restore balance, with participants awaiting a significant clearing signal [13].