Core Viewpoint - The caustic soda futures prices have been weakly fluctuating since September, with domestic supply being ample and reduced purchasing from downstream enterprises leading to increased market supply pressure. The traditional peak season of "Golden September and Silver October" raises questions about whether the expected demand will materialize [1]. Supply and Production - As maintenance facilities resume production, the supply pressure of caustic soda is gradually increasing. As of September 12, the domestic weekly production of caustic soda was 821,100 tons, maintaining a high level for the same period over the past four years [1]. - The capacity utilization rate of caustic soda sample enterprises with a capacity of 200,000 tons and above was 83.4%, with expectations for further increases as maintenance plans decrease [1]. Inventory Levels - As of September 12, the inventory of enterprises was 356,800 tons, remaining at a relatively high level. In Shandong, the inventory reached 162,400 tons, an increase of 3.6% compared to the previous period [2]. Demand Dynamics - The capacity utilization rates in most downstream industries for caustic soda have peaked and are now declining. For alumina, the capacity utilization rate was 83% as of September 12, down 1 percentage point from the previous period, indicating a potential peak [2]. - In Shandong, the quantity of caustic soda delivered to major downstream customers has significantly increased, with alumina enterprises' raw material inventories also rising. The spot price of alumina in Shandong has decreased, negatively impacting the caustic soda market [2]. Market Sentiment and Price Trends - Despite being in the demand peak season of September and October, the overall capacity utilization in downstream industries is at high levels with limited room for further increases. The market supply pressure remains significant, suggesting that the weak fundamentals are unlikely to change [9]. - As of early September, caustic soda spot prices remained high, but by mid-September, prices showed signs of easing, with Shandong downstream enterprises continuously lowering procurement prices, leading to increased bearish sentiment in the market. As of September 16, the ex-factory average price of 32% liquid caustic soda in Shandong dropped to 820 yuan per ton [9]. Conclusion - Overall, while the demand growth expectations during the peak season may provide some support for prices, the limited room for further increases in capacity utilization in downstream industries and ongoing supply pressure suggest that the fundamentals remain weak. It is anticipated that spot prices may have further room to decline, with futures prices reflecting the demand-side benefits and likely maintaining a range-bound fluctuation during the peak season [9].

Report Industry Investment Rating - The trend strength of caustic soda is rated as "1", indicating a "moderately strong" outlook, with a range of [-2, 2], where -2 is the most bearish and 2 is the most bullish [5] Core View of the Report - Caustic soda is expected to run moderately strong in the short - term. Although the far - month valuation is repaired due to cost increase affected by liquid chlorine, the continuous rebound space may be limited. The key is to focus on the persistence of liquid chlorine's impact on caustic soda supply [3] Summary by Relevant Catalogs Fundamental Tracking - On July 10, 2025, the 09 - contract futures price was 2454, the price of the cheapest deliverable 32% caustic soda in Shandong was 810 yuan/ton, the converted futures price of Shandong's 32% caustic soda was 2531, and the basis was 77 [1] Spot News - Based on Shandong, the price of 32% ion - membrane caustic soda was 810 yuan/ton, remaining the same as the previous period. After the procurement price of liquid caustic soda by major downstream enterprises increased, the price was temporarily stable today. The operating load of local enterprises changed little, and the market price was stable [2] Market Condition Analysis - The recent rebound of caustic soda futures was due to the faster - than - expected decline in liquid chlorine prices, causing some enterprises to reduce production. The short - term spot rebound was because low prices stimulated phased replenishment demand. In July, the overhaul capacity decreased compared to June, mainly in the Northwest and East China, and the previously overhauled devices in Shandong will restart. The new capacity from June to July may reach 1.1 million tons, so the supply pressure is still high. Non - aluminum demand support is weak, and the alumina inventory of caustic soda is high, but export support is okay with strong low - price replenishment willingness. Although the electricity price continued to decline in July, the rapid fall of liquid chlorine increased the cost of caustic soda [3]