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].