1. Report Industry Investment Ratings - L: Bullish [2] - PP: Bullish [2] - PVC: Bullish [2] - PX/PTA: Bullish [3] - Ethylene Glycol (MEG): Bullish [3] - Methanol: Bullish [3] - Urea: Cautiously Bullish [3] - Caustic Soda: Neutral [2] 2. Core Views of the Report - Geopolitical conflicts, such as the situation in the Middle East, are the main factors driving the prices of energy and chemical products. Supply - side factors like device maintenance and reduced production due to geopolitical events, as well as changes in demand, affect the market trends of various products [2][3]. - Most products are expected to show a bullish or cautiously bullish trend in the short - term, but there are also risks and uncertainties, and investors need to pay attention to geopolitical changes, cost fluctuations, and policy adjustments [2][3][17]. 3. Summaries According to Related Catalogs L - **Market Performance**: L05 closed at 9523 yuan/ton, up 8.0% from the previous day; the main position increased by 11.0%. The spot price of LL in North China rose 10.5% [6]. - **Core Logic**: Following the short - term cost adjustment, the cost of ethylene remains strong. The shutdown ratio has increased to 15%, and more devices are planned to be shut down before early April. It is expected to continue the bullish shock before the raw material shortage is resolved [2][8]. PP - **Market Performance**: PP05 closed at 9793 yuan/ton, up 8.6% from the previous day; the main position increased by 10.5%. The PDH cost increased by 8.8%, and the profit continued to be compressed [9]. - **Core Logic**: PDH profit continues to be compressed, and the supply has room to shrink. The attack on the South Pars gas field increases the expectation of PG supply reduction, and the cost side strongly supports PP. The shutdown ratio has reached a high of 23%, and the supply - demand pattern is improving [2][11]. PVC - **Market Performance**: V05 closed at 6251 yuan/ton, up 6.4% from the previous day; the main position increased by 0.6%. The inventory of PVC decreased, and the social inventory showed a turning point [13]. - **Core Logic**: The US dollar price of ethylene continues to rise, and the ethylene - based PVC production reduction drives inventory depletion. Geopolitical conflicts intensify the expectation of global ethylene - based PVC production reduction, and some domestic ethylene - based devices have started to reduce production. It is expected to be bullish before the raw material shortage is resolved [2][15]. PX/PTA - **Market Performance**: TA05 closed at 5870 yuan/ton. The PTA processing fee is around 280 +, and the PXN is compressed to around 65 + [16]. - **Core Logic**: Geopolitical games dominate the recent market. The blockade of the Strait of Hormuz keeps oil prices high. The domestic PTA device has reduced production, while the downstream polyester starts to increase the load, but the terminal weaving orders have weakened. The fundamentals of PX have improved, and attention should be paid to geopolitical changes [3][17]. Ethylene Glycol (MEG) - **Market Performance**: The overall valuation is high, and the basis is weakening. The port inventory is at a low level in the same period, and the warehouse receipts and social inventory continue to decline [21]. - **Core Logic**: The cost has increased, and domestic and foreign devices have reduced production. The demand is improving but the strength is weak. The expectation of import reduction is expected to be fulfilled, and the inventory pressure is expected to be relieved in March - April [3][21]. Methanol - **Market Performance**: The main contract is at a high level in the past year, and the basis and monthly spread are weakening. The warehouse receipts have decreased significantly [25]. - **Core Logic**: Geopolitical games dominate the market, and the fundamentals are expected to improve. The domestic methanol load remains high, and the overseas device load is low. The import is expected to decrease in March - April. The demand is weakly stable, and the port inventory is accelerating depletion [3][25]. Urea - **Market Performance**: UR05 closed at 1841 yuan/ton. The domestic and foreign price differences are large, and the comprehensive profit is 188.12 yuan/ton [27]. - **Core Logic**: Although the domestic and foreign price differences of urea are large, exports are difficult to liberalize before the end of the domestic spring plowing peak. The supply has decreased slightly but is still at a high level in the same period, the demand has recovered, and the factory inventory has continued to decrease. The price is restricted by policies [3][28]. Caustic Soda - **Market Performance**: SH05 closed at 2634 yuan/ton, up 3.5% from the previous day. The export orders have improved, and the price of high - concentration caustic soda has increased significantly [32]. - **Core Logic**: Geopolitical conflicts in the Middle East increase the expectation of production reduction of ethylene - based chlor - alkali integrated devices at home and abroad. The domestic maintenance intensity has increased, and the factory inventory has declined from a high level. Pay attention to the spring maintenance progress and export order volume changes [2][33].

Report Industry Investment Ratings - L: ★★, Bullish [1] - PP: ★★, Bullish [1] - PVC: ★★, Bullish [1] - PX/PTA: ★, Bullish [4] - Ethylene Glycol: ★★, Bullish [5] - Methanol: ★★, Bullish [6] - Urea: ★, Cautiously Bullish [6] - Caustic Soda: ★, Sideways [1] Core Views - Supply contraction and cost support drive the prices of L, PP, PVC, and ethylene glycol to remain bullish. The prices of PX/PTA and methanol are expected to be bullish due to cost support and improved fundamentals. Urea prices are cautiously bullish due to the large domestic and foreign price difference and the supply - demand situation. Caustic soda prices are expected to move sideways [1][4][5][6]. Summaries by Variety L - **Core View**: Bullish [1] - **Main Logic**: Supply contraction intensifies, and the cost - end ethylene remains strong. New domestic plant overhauls increase the parking ratio to 15%, and the planned overhaul volume in March increases. Geopolitical conflicts raise the price center, and the market is expected to remain bullish before the raw material shortage is resolved [1][11] - **Market Data**: L05 closing price is 8818 yuan/ton, down 1.1% from the previous day; the main contract basis is - 728 yuan/ton, down 26.4% [9] PP - **Core View**: Bullish [1] - **Main Logic**: PDH profit continues to compress, and supply has room for contraction. The attack on the South Pars gas field increases the expectation of PG supply reduction, and the cost - end strongly supports PP. The current parking ratio is at a high of 21%, the supply - demand pattern is improving, and the market is expected to remain bullish before the raw material shortage is alleviated [1][14] - **Market Data**: PP05 closing price is 9019 yuan/ton, down 1.5% from the previous day; the main contract basis is - 259 yuan/ton, up 14.5% [12] PVC - **Core View**: Bullish [1] - **Main Logic**: Cost support is strong, and the reduction of ethylene - based production drives inventory depletion. Geopolitical conflicts exacerbate the expectation of load reduction in global ethylene - based PVC plants. Some domestic ethylene - based plants have started to reduce loads. The market is expected to be bullish before the raw material shortage is resolved [1][18] - **Market Data**: V05 closing price is 5875 yuan/ton, up 0.3% from the previous day; the main contract basis is - 205 yuan/ton, down 28.1% [16] PX/PTA - **Core View**: Bullish [4] - **Main Logic**: Geopolitical conflicts continue, and the valuation is relatively high. The supply side sees domestic plant load reduction, and the downstream polyester start - up load increases weakly. The fundamentals of upstream PX continue to improve, and the market is expected to remain bullish in the short term. Pay attention to geopolitical changes [4][20] - **Market Data**: TA05 closing price is 6070 yuan/ton, up 250 yuan from the previous day; PTA spot processing fee is 317.8 yuan/ton [19] Ethylene Glycol - **Core View**: Bullish [5] - **Main Logic**: Cost increases and domestic and foreign plant load reduction. The import reduction expectation is expected to be fulfilled, and the port pressure is expected to ease. The supply - demand situation is expected to improve in March - April [5][24] - **Market Data**: The overall ethylene glycol start - up load is 66.45% (down 0.32pct from the previous period) [24] Methanol - **Core View**: Bullish [6] - **Main Logic**: Geopolitical games dominate the market, and the fundamentals are expected to improve. The domestic methanol load remains high, and the overseas plant load is low. The import is expected to decrease in March - April. The demand side is weakly stable, and the port inventory is accelerating depletion [6][28] - **Market Data**: The main methanol contract is at a nearly one - year high, and the basis and monthly spread are weakening [28] Urea - **Core View**: Cautiously Bullish [6] - **Main Logic**: The domestic and foreign price difference of urea is large, but exports are difficult to liberalize before the end of the domestic spring plowing peak. Supply has declined slightly but remains at a high level. Demand has recovered, and the factory inventory is continuously decreasing. The price is restricted by policies [6][31] - **Market Data**: Urea production is 21.04 tons per day, and the comprehensive profit is 188.12 yuan/ton [30] Caustic Soda - **Core View**: Sideways [1] - **Main Logic**: The overhaul intensity increases, and the factory inventory declines from a high level. Geopolitical conflicts in the Middle East increase the expectation of load reduction in ethylene - based chlor - alkali integrated plants at home and abroad. Pay attention to the spring overhaul progress and export order volume changes [1][36] - **Market Data**: SH05 closing price is 2544 yuan/ton, up 3.2% from the previous day; the main contract basis is - 391 yuan/ton, down 22.9% [35]

1. Report's Industry Investment Rating - Not provided in the report 2. Core View of the Report - The supply of soda ash shows a downward trend as enterprise maintenance begins, but the overall supply is expected to be abundant. The daily melting volume of downstream float glass and photovoltaic glass continues to decline, and the inventory of soda ash plants is at the highest level in the same period in history, which is bearish. The basis indicates that the futures price is higher than the spot price, and the inventory is above the five - year average, also bearish. The price is running below the 20 - day moving average, which is neutral. The main position is net short with a reduction in short positions, bearish. In the short term, soda ash is expected to fluctuate mainly due to cost - side support [2]. 3. Summary According to Relevant Catalogs 3.1 Daily View - **Fundamentals**: Supply is decreasing with enterprise maintenance, but overall supply is expected to be abundant. Downstream float and photovoltaic glass daily melting volume is declining, and plant inventory is at a historical high in the same period, bearish [2]. - **Basis**: The spot price of heavy - quality soda ash in Hebei Shahe is 1190 yuan/ton, the closing price of SA2605 is 1202 yuan/ton, and the basis is - 12 yuan, with futures at a premium to spot, bearish [2]. - **Inventory**: The national soda ash plant inventory is 185.38 tons, a decrease of 4.03% from the previous week, and the inventory is above the five - year average, bearish [2]. - **Disk**: The price is running below the 20 - day moving average, and the 20 - day moving average is upward, neutral [2]. - **Main Position**: The main position is net short with a reduction in short positions, bearish [2]. - **Expectation**: Due to cost - side support, soda ash is expected to fluctuate in the short term [2]. 3.2 Influencing Factors - **Likely to Rise**: Downstream float glass has few cold repairs and stable production. The conflict between the US and Iran boosts market bullish sentiment [4]. - **Likely to Fall**: The operating load of the second - phase production line of Yuangxing Energy has increased, and there is no new maintenance plan, so the output is expected to remain high. The downstream photovoltaic glass of heavy - quality soda ash has reduced production, and the demand for soda ash has weakened [4]. - **Main Logic**: The supply of soda ash is at a high level, the terminal demand is declining, the inventory is at a high level in the same period, and the mismatch between supply and demand in the industry has not been effectively improved [4]. 3.3 Soda Ash Futures Market | Indicator | Previous Value | Current Value | Change Rate | | --- | --- | --- | --- | | Main Contract Closing Price (yuan/ton) | 1217 | 1220 | - 1.23% | | Heavy - Quality Soda Ash: Shahe Low - end Price (yuan/ton) | 1205 | 1190 | - 1.24% | | Main Basis (yuan/ton) | -12 | -12 | 0.00% | [5] 3.4 Soda Ash Spot Market - The low - end price of heavy - quality soda ash in the Hebei Shahe market is 1190 yuan/ton, a decrease of 15 yuan/ton from the previous day [11]. 3.5 Soda Ash Production Profit - The profit of heavy - quality soda ash using the North China ammonia - soda method is - 25.30 yuan/ton, and the profit using the East China co - production method is 227.5 yuan/ton [14]. 3.6 Soda Ash开工率、产能产量 - The weekly industry operating rate of soda ash is 87% [17]. - The weekly output of soda ash is 81.81 tons, including 43.40 tons of heavy - quality soda ash, at a historical high [19]. 3.7 Fundamental Analysis - Demand - **Soda Ash Sales Rate**: The weekly sales rate of soda ash is 101.92% [22]. - **Soda Ash Downstream Demand**: - **Float Glass**: The daily melting volume of national float glass is 14.58 tons, and the operating rate is 70.41% [25]. - **Photovoltaic Glass**: Not detailed in the report 3.8 Fundamental Analysis - Inventory - The national soda ash plant inventory is 185.38 tons, a decrease of 4.03% from the previous week, and the inventory is above the five - year average [30]. 3.9 Fundamental Analysis - Supply - Demand Balance Sheet | Year | Effective Capacity (10,000 tons) | Output (10,000 tons) | Operating Rate | Imports (10,000 tons) | Exports (10,000 tons) | Net Imports (10,000 tons) | Apparent Supply (10,000 tons) | Total Demand (10,000 tons) | Supply - Demand Difference (10,000 tons) | Capacity Growth Rate | Output Growth Rate | Apparent Supply Growth Rate | Total Demand Growth Rate | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2017 | 3035 | 2715 | 89.46% | 14 | 152 | - 138 | 2577 | 2517 | 60 | 2.20% | 5.10% | 7.40% | 4.60% | | 2018 | 3087 | 2583 | 83.57% | 29 | 138 | - 109 | 2474 | 2523 | - 49 | 1.85% | - 4.86% | - 4.00% | 0.24% | | 2019 | 3247 | 2804 | 86.36% | 19 | 144 | - 125 | 2679 | 2631 | 48 | 5.05% | 8.56% | 8.29% | 4.28% | | 2020 | 3317 | 2757 | 73.40% | 36 | 138 | - 102 | 2655 | 2607 | 48 | 2.16% | - 1.68% | - 0.90% | - 0.91% | | 2021 | 3288 | 2892 | 71.90% | 23 | 73 | - 50 | 2842 | 2764 | 78 | - 0.87% | 4.90% | 7.04% | 6.02% | | 2022 | 3114 | 2944 | 85.26% | 11 | 206 | - 195 | 2749 | 2913 | - 164 | - 5.29% | 1.80% | - 3.27% | 5.39% | | 2023 | 3342 | 3228 | 87.76% | 82 | 144 | - 62 | 3166 | 3155 | 11 | 7.32% | 9.65% | 15.17% | 8.31% | | 2024E | 3930 | 3650 | 78.20% | 42 | 156 | - 114 | 3536 | 3379 | 157 | 17.59% | 13.07% | 11.69% | 7.10% | [31]

Group 1: PVA Applications and Market Dynamics - PVA is a water-soluble biodegradable polymer with applications in various industries, including fine chemicals, green construction, and pharmaceuticals, supported by national development policies [2] - The price of ethylene, a core raw material, has increased due to geopolitical tensions, positively impacting the company's PVA production costs and margins [2] - China's PVA export demand is expected to grow, benefiting from stable raw material supply and pricing [3] Group 2: Competitive Advantages and Production Efficiency - The company has established a circular economy industrial chain from limestone to PVA, enhancing raw material utilization and reducing production costs and emissions [4] - A multi-layered R&D system has been developed to address impurities in the acetylene method, ensuring high-quality PVA resin production for specialized applications [5] Group 3: Environmental Impact and Regulatory Compliance - The circular economy model contributes to lower energy consumption and pollution emissions, aligning with carbon emission control policies that promote high-quality industry development [6] Group 4: Product Development and Market Readiness - The company has a production capacity of 7 million square meters for PVA optical films, with plans for a new project to produce 10 million square meters annually, ready for large-scale sales in 2026 [7] - The DMC project has successfully launched, with products receiving market recognition and ongoing supply agreements with electrolyte manufacturers [8]

Report Industry Investment Rating - Not provided in the content Core Viewpoints of the Report - This week, PVC production decreased slightly, with the calcium carbide method increasing its load and the ethylene method decreasing its load. After the upstream ethylene reduces its load next week, ethylene - based PVC production will decrease, and overall PVC production is expected to continue to decline. The export order volume has slightly recovered. Even if the export tax rebate for PVC is cancelled, it is expected to have a price competitive advantage. The apparent demand for this week was slightly lower than expected, and the inventory decreased by 33,200 tons this week, with further inventory reduction expected next week. The spot price of caustic soda fluctuated strongly, the calcium carbide price increased this week, the price of ethylene increased significantly, and the export profit of PVC improved significantly. Attention should be paid to whether ethylene - based PVC will continue to cut production, the impact of next - week's warehouse receipt cancellation on the spot, and the risk of price correction [6][9][10] Summary According to the Directory 1. Spot Market - **PVC Supply and Demand**: This week's total PVC production was 489,900 tons, a decrease of 7,500 tons from last week. The ethylene - based production was 125,600 tons, a decrease of 15,200 tons, and the calcium carbide - based production was 364,200 tons, an increase of 7,700 tons. The weekly average import and export volumes remained unchanged at 5,000 tons and 67,500 tons respectively. The apparent demand was 460,500 tons, a decrease of 59,300 tons from last week. The total inventory was 975,900 tons, a decrease of 33,200 tons from last week. It is expected that next week's production will be 459,000 tons and 453,500 tons in the following week, and the apparent demand will be 449,100 tons and 426,800 tons respectively, with the inventory continuing to decrease [6] - **Related Product Prices**: The price of 32% caustic soda rose from 630 yuan/ton last week to 650 yuan/ton this week. The price of Shandong liquid chlorine dropped from 300 yuan/ton to 100 yuan/ton. The prices of Shandong raw salt and Shaanxi semi - coke remained stable. The prices of calcium carbide in Shandong, Shaanxi, and Wuhai increased by 150 yuan/ton, 175 yuan/ton, and 100 yuan/ton respectively. The prices of ethylene and VCM also increased [7] 2. Basis and Spread - **Basis**: The basis of calcium carbide - based PVC in East China, South China, and Shandong all weakened, with the East China calcium carbide - based basis dropping from - 14 yuan/ton last week to - 180 yuan/ton this week [9] - **Inter - month Spread**: The 9 - 1 inter - month spread strengthened from - 1 last week to 59 this week, while the 5 - 9 spread weakened from - 18 to - 34 [9] 3. Industrial Chain Profits - **Production Profits**: The calcium carbide production profit in Shaanxi increased from - 502 yuan/ton last week to - 327 yuan/ton this week. The production profits of some PVC production methods changed, such as the Northwest integrated PVC profit decreasing from 405 yuan/ton to 285 yuan/ton, and the imported ethylene - based PVC profit dropping from - 244 yuan/ton to - 1470 yuan/ton [9] - **Import and Export Profits**: The FOB Tianjin relative export profit increased from 916 yuan/ton last week to 925 yuan/ton this week, and the theoretical export profits to India and Southeast Asia increased significantly, by 925 yuan/ton and 1645 yuan/ton respectively [9] 4. Market Outlook - **Upstream**: The price of upstream PVC fluctuated, the price of caustic soda strengthened, and the comprehensive profit slightly declined. The calcium carbide - based production increased, and the ethylene - based production may decline. Attention should be paid to the load - reduction situation of the upstream cracking units [10] - **Mid - stream**: Traders mainly adopted the spot - futures arbitrage strategy, but the shipment situation has slightly deteriorated. The cancellation of warehouse receipts next week may suppress the spot [10] - **Downstream**: The downstream operating rate is still weak, but there is a slight situation of inventory replenishment [10] - **Strategies**: Pay attention to spot - futures arbitrage opportunities. Be cautious of the risk of correction for unilateral trading. Temporarily exit the 5 - 9 positive spread arbitrage. There is no option strategy for now [10]

Summary of Conference Call for Cangzhou Dahua Company Overview - Cangzhou Dahua operates with a production capacity of 160,000 tons of TDI, 100,000 tons of PC, and 200,000 tons of Bisphenol A [3] - The company focuses on high-end differentiated products, particularly in the special PC segment, which has led to significant profit margins compared to regular PC [3] Industry and Market Dynamics - Geopolitical tensions and fluctuations in crude oil prices have led to an increase in raw material prices such as toluene and benzene; however, product prices have increased at a higher rate than raw material prices, mitigating negative impacts on overall operations [2][4] - TDI prices reached a high of 19,000 RMB/ton but have recently decreased to around 17,000 RMB/ton due to stabilization in raw material prices [2][6] - Bisphenol A prices are expected to rebound significantly starting late January 2026, supported by rising costs of phenol and acetone [2][3] Financial Performance and Projections - The company has maintained full operational capacity across all facilities, with strong downstream demand despite a recent inventory digestion phase among customers [2][6] - The company has a low debt ratio and is currently formulating its "15th Five-Year Plan," which includes new product development and capacity expansion in the polyurethane industry [2][8][9] Supply Chain and Risk Management - Cangzhou Dahua has a diverse supplier base, reducing reliance on any single source and mitigating supply chain risks [5][7] - The company has implemented ongoing technical upgrades to its older TDI facilities to enhance efficiency and reduce operational costs, ensuring competitiveness despite the age of the equipment [7] Key Insights - The rapid transmission of price increases from raw materials to products has been a critical factor in maintaining profitability [4] - The company’s strategic focus on high-end products and continuous investment in technology and capacity expansion positions it well for future growth [2][8]

Investment Rating - The investment rating for the company is "Accumulate" [4] Core Insights - The company has signed a three-year sales framework agreement with Framatome, a leading global nuclear power enterprise, to supply nuclear-grade sponge zirconium from 2026 to 2028, enhancing its presence in the international nuclear supply chain [1] - Hafnium metal prices have surged to over $12,222 per kilogram, marking a 29% increase since the beginning of 2026 and a 180% increase compared to the start of 2025, indicating a structural shortage in hafnium supply due to high demand in various industries [2] - The company is actively developing solid-state battery and robotics sectors, with successful small-scale supply of zirconium-based chloride materials to solid-state battery factories and ongoing projects in lightweight magnesium-aluminum alloys [3] Financial Summary - The company's projected revenues for 2025-2027 are estimated at 1.2 billion, 4.0 billion, and 6.6 billion yuan, respectively, with corresponding net profits of 120 million, 401 million, and 664 million yuan, indicating significant growth potential [4][6] - Earnings per share (EPS) are forecasted to be 0.28, 0.95, and 1.57 yuan for the years 2025, 2026, and 2027, respectively [4] - The company is expected to maintain a strong financial position with a projected P/E ratio decreasing from 241.36 in 2024 to 27.55 in 2027, reflecting improved profitability [6]

Investment Rating - The investment rating for the company is "Accumulate" [4] Core Insights - The company has signed a three-year sales framework agreement with Framatome, a leading global nuclear power enterprise, to supply nuclear-grade sponge zirconium from 2026 to 2028, enhancing its presence in the international nuclear supply chain [1] - Hafnium metal prices have surged to over $12,222 per kilogram, marking a 29% increase since the beginning of 2026 and a 180% increase compared to the start of 2025, indicating a structural shortage in hafnium supply due to high demand in various industries [2] - The company is actively expanding into solid-state batteries and robotics, with successful small-scale supply of zirconium-based chloride materials to solid-state battery factories and ongoing projects in lightweight magnesium-aluminum alloys for various applications [3] Financial Summary - The company's projected revenues and net profits for 2025-2027 are as follows: - Revenue: 1.2 billion, 4.0 billion, and 6.6 billion yuan - Net Profit: 0.28, 0.95, and 1.57 yuan per share, with significant growth expected [4][6] - The company is expected to achieve a net profit of 401 million yuan in 2026, reflecting a 235.19% increase from 2025 [6] - The projected P/E ratios for 2025-2027 are 152.78, 45.58, and 27.55, indicating a favorable valuation trend [6]

1. Report Industry Investment Rating The document does not provide the industry investment rating. 2. Core Views of the Report - Since the beginning of the year, inflation has shown the characteristics of "CPI increase under the influence of the Spring Festival effect and PPI price increase accelerated by imported inflation". The government work report during the Two Sessions maintained the target of the consumer price increase at 2%, and pointed out that promoting stable economic growth and reasonable price recovery should be important considerations for monetary policy. With the repeated geopolitical conflicts and high oil prices recently, the market sentiment remains cautious under the expectation of inflation turning positive. Looking forward, inflation is mainly affected by two factors: on one hand, the domestic supply is abundant, and the consumer price trend is relatively stable; on the other hand, affected by the intensifying geopolitical risks in the Middle East, the global inflation rate may rise significantly, increasing the risk of imported inflation in the later stage. Coupled with the relatively low base in 2025, it is expected that the CPI growth rate will continue a moderate recovery, and the turning point of the PPI year - on - year growth rate to positive will be advanced. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend [6]. - The impact of the base period rotation on the CPI year - on - year index is limited, and the CPI is expected to have a moderate recovery, with the annual central value at about 0.8% [6]. - The turning point of the PPI year - on - year growth rate to positive may be advanced under the impact of oil prices. If the oil price drops to $65 per barrel and remains stable, the PPI is likely to turn positive in the second half of Q2; if the oil price remains at about $80 per barrel or rises to $108 per barrel, the PPI may turn positive rapidly in Q2, or even in March. Based on the EIA assumption, the PPI may turn positive in March, and the central value of the PPI in 2026 will be about 1.07% [7]. - When the inflation center rises, the interest rate center does not necessarily rise, and the monetary policy does not necessarily tighten. This round of inflation recovery is mainly driven by the cost side, and the probability of monetary policy tightening is low. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend. It is recommended to moderately participate in long - term bonds during the adjustment. With the continuous loosening of the capital side, the short - end is more certain, and at the same time, pay attention to the opportunities for spread compression, such as the spread between China Development Bank bonds and Treasury bonds, and the spread between local government bonds and Treasury bonds [8]. 3. Summary by Directory 3.1. The Impact of Base Period Rotation on CPI Is Limited, and CPI Shows a Moderate Recovery - **Base Period Rotation and Classification Adjustment**: China conducts a base period rotation for CPI and PPI every five years. On February 11, 2026, the National Bureau of Statistics released CPI data based on the 2025 base period. The number of major categories and basic classifications remains unchanged, with 8 major categories and 268 basic classifications. New commodity and service classifications reflecting new consumption content have been added, and some category names have been modified. A travel service price index has been newly calculated [14]. - **Weight Changes**: Compared with the 2020 base period, the overall weight changes of each CPI classification in this base period are not significant. Structurally, the weight of services in CPI has increased, while the weight of consumer goods has decreased. In terms of classification, the weights of five major categories, including food, tobacco, alcohol and dining out, transportation and communication, education, culture and entertainment, medical care, and other supplies and services, have increased. In the category of food, tobacco, alcohol and dining out, the weight of food has decreased, while the weight of dining out has increased. The weights of three major categories, including clothing, housing, and household goods and services, have decreased [16][18]. - **Impact on CPI Year - on - Year Index**: The National Bureau of Statistics pointed out that the average impact of this base period rotation on the monthly year - on - year index of CPI and PPI is about 0.06 and 0.08 percentage points respectively, which is relatively small. The calculation shows that the impact of CPI weight changes on the monthly CPI year - on - year index is about 0.04 percentage points, which is highly consistent with the data released by the National Bureau of Statistics in terms of direction and order of magnitude, indicating that the impact of CPI weight adjustment on the CPI year - on - year trend is limited and controllable [20]. - **CPI Recovery Trend**: From January to February 2026, the average CPI year - on - year increase was 0.75%, showing a moderate recovery trend. Affected by the Spring Festival misalignment effect, consumer demand pulsed in February, pushing the CPI up from 0.2% in January to 1.3%. The core CPI also showed a significant upward trend. Overall, CPI operation is mainly dominated by historical seasonal laws. With the marginal improvement of food and energy prices and the high - level volatility of international oil prices, CPI is expected to continue the recovery trend. In 2026, the CPI center is expected to rise moderately compared with 2025, with the annual central value at about 0.8% [23]. 3.2. The Turning Point of PPI Year - on - Year Growth Rate to Positive May Be Advanced under the Impact of Oil Prices - **PPI Industry Weights**: PPI is calculated by the weighted average of 40 industry prices. Using the average operating income share of corresponding industries from 2017 to 2025 as a substitute for weights, it is found that industries such as computer, communication and other electronic equipment manufacturing (11.1%), automobile manufacturing (7.5%), electrical machinery and equipment manufacturing (7.2%), and chemical raw materials and chemical products manufacturing (6.6%) have relatively high weights. Since 2021, the weights of electrical machinery and equipment manufacturing, computer, communication and other electronic equipment manufacturing, and power and heat production and supply industries have increased significantly [27]. - **PPI Industry Contribution**: The contribution of high - weight industries to PPI is not necessarily large. The top 7 industries with high contribution rates to PPI fluctuations, including oil, coal and other fuel processing, ferrous metal smelting and rolling processing, chemical raw materials and chemical products manufacturing, coal mining and washing, non - ferrous metal smelting and rolling processing, non - metallic mineral products, and oil and gas extraction, contribute about 80% of the total fluctuations [29][31]. - **Core Influencing Factors of PPI**: Crude oil, coal, ferrous metals, and non - ferrous metals are the core influencing factors of PPI. They are widely used in the upstream, mid - stream, and downstream industrial chains. The top 10 industries with high contribution rates to PPI fluctuations are mostly directly related to these four factors, and the relevant industries with high correlations to them contribute about 90% of the PPI fluctuations [32][36]. - **Analysis of Crude Oil Price Trends**: Affected by the continuous geopolitical conflicts in the Middle East, international oil prices have continued to rise. In March 2026, oil prices experienced a roller - coaster trend of "soaring - plummeting - rebounding". Although the International Energy Agency coordinated the release of strategic petroleum reserves, the market still worried that the scale and rhythm of the release might not be able to make up for the supply gap in the Middle East, so international oil prices continued to rise [41][44]. - **Impact of Crude Oil Prices on PPI**: Crude oil is widely used in the upstream, mid - stream, and downstream industrial chains, and the relevant industries account for about 12.4% of PPI. A 10% increase in oil prices may push up PPI by about 0.4 percentage points. The actual impact of oil prices on China's inflation depends on the subsequent development of the conflict. Different scenarios of oil price changes have different impacts on China's PPI, and the EIA predicts that the PPI may turn positive in March, with the central value in 2026 at about 1.07% [47][50][53]. 3.3. The Impact of Inflation Center Rise on the Bond Market - **Fundamental Reasons for Interest Rate Center Rise**: According to the causes, inflation can be divided into demand - pull inflation, cost - push inflation, and structural inflation. Since the 21st century, there have been six obvious inflation processes in China. When the inflation center rises, the interest rate center does not necessarily rise, and the monetary policy does not necessarily tighten. Demand - pull inflation often drives the interest rate center up, while cost - type and structural inflation do not necessarily [58]. - **Analysis of Previous Inflation Rounds**: The first four rounds of inflation were mostly demand - pull inflation, accompanied by rising interest rates. The central bank tightened the money supply through measures such as raising the reserve requirement ratio and interest rates. The last two rounds of inflation were more in line with cost - push inflation, and interest rates remained flat or declined. The central bank implemented a relatively loose monetary policy to maintain economic growth [59][70]. - **Analysis of the Current Round of Inflation**: This round of inflation recovery is mainly driven by the cost side. Affected by geopolitical factors, the prices of commodities such as crude oil have risen significantly, pushing the PPI year - on - year to recover rapidly. The government work report in 2026 clearly stated to continue implementing a moderately loose monetary policy, so the probability of monetary policy tightening is low. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend. It is recommended to moderately participate in long - term bonds during the adjustment, pay attention to the short - end with higher certainty, and also pay attention to the opportunities for spread compression [74].

Report Summary 1. Report Industry Investment Rating No relevant information provided. 2. Core View of the Report - The fundamentals of soda ash are bearish, with high supply expectations, declining downstream demand, and high inventory. The basis shows futures premium over spot, and the main position is net short with an increase in short positions. Considering cost - side support, soda ash is expected to move in a range in the short term [2]. 3. Summary by Relevant Catalogs 3.1 Daily View - **Fundamentals**: The start - up load of Yuangxing Energy's Phase II has increased, and the output of soda ash plants is at a high level, with overall supply expected to be abundant. The daily melting volume of downstream float glass and photovoltaic glass has been declining, and the inventory of soda ash plants is at the highest level in the same period of history [2]. - **Basis**: The spot price of heavy soda ash in Hebei Shahe is 1,200 yuan/ton, and the closing price of SA2605 is 1,211 yuan/ton, with a basis of - 11 yuan, indicating futures premium over spot [2]. - **Inventory**: The national in - plant inventory of soda ash is 1.9317 million tons, a decrease of 0.80% from the previous week, and the inventory is above the 5 - year average [2][30]. - **Disk**: The price is running below the 20 - day line, and the 20 - day line is upward [2]. - **Main Position**: The main position is net short, and short positions are increasing [2]. - **Expectation**: Supported by the cost side, soda ash is expected to move in a range in the short term [2]. 3.2 Factors Affecting Soda Ash - **Positive Factors**: There is less cold repair of downstream float glass, and production remains stable. The conflict between the US and Iran boosts the bullish sentiment in the market [4]. - **Negative Factors**: The start - up load of Yuangxing Energy's Phase II production line has increased, and there is no expectation of new maintenance, so the output is expected to remain at a high level. The production of heavy - soda downstream photovoltaic glass has decreased, and the demand for soda ash has weakened [4]. - **Main Logic**: The supply of soda ash is at a high level, terminal demand is declining, inventory is at a high level in the same period, and the mismatch between supply and demand in the industry has not been effectively improved [4]. 3.3 Soda Ash Futures Market | Indicator | Previous Value | Current Value | Change Rate | | --- | --- | --- | --- | | Main Contract Closing Price (yuan/ton) | 1,243 | 1,211 | - 2.57% | | Heavy Soda Ash: Shahe Low - end Price (yuan/ton) | 1,220 | 1,200 | - 1.64% | | Main Basis (yuan/ton) | - 23 | - 11 | - 52.17% | [5] 3.4 Soda Ash Spot Market - The low - end price of heavy soda ash in the Hebei Shahe market is 1,200 yuan/ton, a decrease of 20 yuan/ton from the previous day [11]. 3.5 Soda Ash Production - **Production Profit**: The profit of heavy soda ash using the North China ammonia - soda process is - 94.20 yuan/ton, and the profit of the East China co - production process is 86 yuan/ton. The production profit of soda ash is at a historical low [14]. - **Start - up Rate and Output**: The weekly start - up rate of the soda ash industry is 87%. The weekly output of soda ash is 809,200 tons, including 428,300 tons of heavy soda ash, and the output is at a historical high [17][19]. 3.6 Fundamental Analysis - Demand - **Sales - to - Production Ratio**: The weekly sales - to - production ratio of soda ash is 101.92% [22]. - **Downstream Demand**: The daily melting volume of national float glass is 146,900 tons, and the start - up rate is 71.05% [25]. 3.7 Fundamental Analysis - Inventory - The national in - plant inventory of soda ash is 1.9317 million tons, a decrease of 0.80% from the previous week, and the inventory is above the 5 - year average [30]. 3.8 Fundamental Analysis - Supply - Demand Balance Sheet The report provides the annual supply - demand balance sheet of soda ash from 2017 to 2024E, including data on effective capacity, output, start - up rate, imports, exports, net imports, apparent supply, total demand, supply - demand difference, and growth rates of capacity, output, apparent supply, and total demand [31].