Report Industry Investment Rating No relevant content provided. Core Views For Caustic Soda - Recently, the short - driving force for caustic soda has significantly slowed down, and the futures price has rebounded due to the faster - than - expected price drop of liquid chlorine. There is an increasing possibility of passive production cuts in caustic soda caused by liquid chlorine disturbances in the future. The short - term spot price has rebounded due to low prices stimulating the market's phased replenishment demand, but the sustainability may be limited [5]. - From a fundamental perspective, the overhaul capacity of caustic soda in July has decreased significantly compared to June. The overhauls in July are mainly concentrated in the Northwest and East China, and the previously overhauled units in Shandong will gradually restart. Meanwhile, the new production capacity of caustic soda from June to July may reach 1.1 million tons, so the supply pressure remains high. On the demand side, the non - aluminum demand support is weak, and the alumina's caustic soda inventory is high, but the export direction has good support, with a strong willingness to replenish at low prices. In terms of cost, although the electricity price continued to decline in July, the rapid decline of liquid chlorine led to an increase in the cost of caustic soda [5]. - In summary, affected by liquid chlorine, the far - month valuation has been repaired under the condition of increased costs, but the space for continuous rebound may be limited. In the later stage, focus on the transmission impact of liquid chlorine on caustic soda supply. If there are substantial production cuts or load reductions, it can be treated bullishly [5]. - Strategy: Weiqiao slightly increased the price, and the market shifted from an 8 - 10 inverse spread to a positive spread, but considering the off - season demand and warehouse receipt factors, the space will be limited. If there are substantial production cuts on the supply side in the future, it is beneficial for the peak - season contracts. A 10 - 1 positive spread or selling put options can be considered [5]. For PVC - From a fundamental perspective, the profit of the current chlor - alkali integration in the Northwest is gradually declining, but there is still a small profit. Looking at the second half of the year, the driving force for production cuts on the supply side is insufficient, and the structure of high production and high inventory of PVC is difficult to ease. Therefore, the market will still short the chlor - alkali profit in the later stage, but the short sentiment has weakened due to the rectification of the involution [6]. - The high - production structure is difficult to change in the short term: The overhaul volume of PVC is lower than that in the same period of 2023, and the high - production pattern continues. On the one hand, the chlor - alkali cost has declined. On the other hand, the demand for caustic soda in 2025 has good support, maintaining relatively high profits. The chlor - alkali industry chain compensates for chlorine with alkali, which also increases the difficulty of large - scale production cuts of PVC due to losses. In addition, there will still be a lot of production capacity put into operation in the future, especially in June - July, facing the release of new production capacity, with an expected production of 1.1 million tons. The high - production pattern is difficult to change in the short term [6]. - The pressure of high inventory persists, and the export demand can only relieve it periodically: In 2025, the competition pressure in the PVC export market has increased. Exports will still be affected by India's anti - dumping duty increase and BIS certification. India's PVC import BIS policy may be postponed for 6 months, and the Indian Trade Remedy Authority may make a final decision on the anti - dumping investigation of imported PVC in the first half of July. Therefore, the sustainability of PVC exports in the later stage remains to be observed. In terms of domestic demand, the demand for PVC downstream products related to real estate is still weak year - on - year, and enterprises' willingness to stock up is low [6]. Summary by Directory 1. Caustic Soda Price and Spread - The price of the cheapest deliverable caustic soda in Shandong is about 2,406 yuan/ton [9]. - The 09 basis of caustic soda has weakened, and the 8 - 10 month spread has strengthened [18]. - From January to May 2025, the cumulative export of caustic soda was 1.68 million tons, a year - on - year increase of 51.8%. Among them, the cumulative export to Indonesia from January to May was 620,000 tons, a year - on - year increase of 91.4%. It is expected that the export demand for caustic soda will continue to be good in the second half of the year, but attention should be paid to the stocking rhythm of traders and downstream customers. It is estimated that the export of caustic soda in 2025 will increase by at least 30% year - on - year, and the annual export may exceed 4 million tons [22]. - The export support for high - concentration caustic soda will be reflected in the price difference between 50% caustic soda and 32% caustic soda. The willingness to replenish stocks in the export direction at FOB of 380 - 390 US dollars is strong [26]. - The spot price has continued to decline, and the stocking demand of traders in South China is weak, resulting in limited expansion of the arbitrage space [31]. - The price difference between 50% caustic soda and 32% caustic soda is lower than the evaporation cost, which is negative for caustic soda [35]. 2. Caustic Soda Supply - The market structure shows a decline in production and inventory. This week, the domestic caustic soda capacity utilization rate was 80.5%, a week - on - week decrease of 2% [38]. - The factory inventory of fixed liquid caustic soda sample enterprises with a capacity of 200,000 tons and above in the country was 384,200 tons (wet tons), a week - on - week decrease of 1.58% and a year - on - year increase of 2.45%. This week, the storage - capacity ratio of liquid caustic soda sample enterprises in the country was 22.76%, a week - on - week decrease of 0.72%. Except for the storage - capacity ratios in North China, Northeast China, and South China showing a downward trend, the storage - capacity ratios in the Northwest, Central China, East China, and Southwest China increased week - on - week [40]. - Pay attention to the overhaul scale from July to August. At the beginning of July, the overhaul capacity of large factories in Shandong was resumed [42]. - In 2025, there will still be a lot of production capacity for caustic soda to be put into operation, but considering the continuous losses of chlorine - consuming downstream industries, especially PVC, the overall production capacity expansion may be less than expected. The capacity increase may be about 2%. Pay attention to the production capacity put into operation by Tianjin Bohua, Gansu Yaowang, and Qingdao Bay Chemical from June to July [43][46]. - Liquid chlorine is stable, the price of caustic soda is falling, and the chlor - alkali profit is at a relatively high level compared to the same period in the past three years [47]. - Among the chlorine - consuming downstream industries, the operating rate of propylene oxide has rebounded, but the profit is still at a low level; the operating rate of epichlorohydrin has declined, and the glycerol - method profit is in a loss state; the operating rates of dichloromethane and trichloromethane have decreased month - on - month [52][58][63]. 3. Caustic Soda Demand - The operating rate of alumina has increased month - on - month, the inventory has increased, and the profit has declined. The alumina device has resumed production, and the output has increased. The key in the second half of the year is whether the alumina production capacity put into operation can drive a new round of demand expansion. Pay attention to the production - capacity put - into - operation time of Weiqiao's 1 million tons, Wenfeng's third - line 1.6 million tons, and Guangxi Guangtou's 1 million tons [69][72][73]. - The pulp industry's production capacity continues to expand, but it is in the off - season of terminal demand. The operating rate of the finished - paper industry is lower than the same period last year [74][84]. - The operating rates of viscose staple fiber and printing and dyeing have declined, and the short - term demand is weak [85]. - The operating rate of the water - treatment industry has decreased month - on - month, while the operating rate of the ternary precursor industry is stable [89][91]. - The caustic soda balance sheet shows different supply - demand differences under different demand scenarios and corresponding operating rates [96]. 4. PVC Price and Spread - The PVC basis has strengthened, and the 9 - 1 month spread has fluctuated weakly [99]. 5. PVC Supply and Demand - The operating rate of PVC has decreased month - on - month but has not reached the level of production cuts in 2023. There will be more overhauls in the Northwest from July to August in 2025 [104][106]. - Currently, there is new production capacity in the PVC industry. By 2025, 2.1 million tons of production capacity will be put into operation, with more concentrated production - capacity releases in the second half of the year. Most of the ethylene - method production - capacity releases have a relatively high certainty. There will be concentrated production - capacity releases of PVC from June to July, with an expected 1.1 million tons [107]. - The profit of the integrated devices in the Northwest is acceptable. In 2025, special attention should be paid to the profit of caustic soda. The chlor - alkali industry chain's practice of compensating for chlorine with alkali will be a long - term trend, which increases the difficulty of large - scale production cuts of PVC due to losses. The decline in coal prices has led to a decrease in costs, and the chlor - alkali integrated devices in the Northwest have always had profits in the first half of the year [109][112]. - PVC production enterprises have slightly reduced their inventory, while the social inventory has increased. The operating rate of PVC downstream industries has decreased month - on - month and is weaker than the same period last year [114][118]. - From January to May 2025, the cumulative export of PVC was 1.6985 million tons, a cumulative year - on - year increase of 56.07%. Among them, the export to India was 763,000 tons, a cumulative year - on - year increase of 31.6%. India is still the most important destination for China's PVC exports. However, the later PVC exports may be affected by policies. The Indian Trade Remedy Authority may make a final decision on the anti - dumping investigation of imported PVC in the first half of July, so the sustainability of PVC exports in the later stage remains to be observed [125]. - The number of PVC warehouse receipts has not increased significantly [127].