Core Viewpoint - The recent fluctuations in caustic soda futures prices are influenced by the decline in coal prices and limited downstream demand for high-priced caustic soda, leading to a high-level correction in the market [1][2]. Cost Factors - The primary cost for caustic soda is electricity, with coal prices experiencing a significant drop after a two-month rebound due to supply-side constraints. As of September 1, the price of Qinhuangdao thermal coal fell to 690 yuan/ton, a decrease of approximately 2% from 704 yuan/ton on August 20, marking a near three-year low [2]. - Seasonal trends indicate that electricity consumption typically peaks in mid-August, suggesting a potential decline in coal demand and further price reductions in the future [2]. Downstream Support - The caustic soda downstream market is diverse, with aluminum oxide being the largest consumer, accounting for over 30% of demand. However, increased production capacity in the aluminum oxide sector has led to oversupply, causing operational challenges and reduced profitability for producers [3][4]. - As of June 2025, the domestic aluminum oxide capacity reached 111.75 million tons/year, a year-on-year increase of 12.59%, with an operational capacity of 90 million tons/year, up 8.37% year-on-year [3]. Market Dynamics - Despite entering the peak consumption season, the aluminum oxide market is expected to remain oversupplied, limiting price increases and support for the caustic soda market [4]. - Non-aluminum downstream sectors, such as pulp and dyeing, have seen a slight recovery in operational rates, but high caustic soda prices have led to limited purchasing willingness, resulting in weak demand support [7]. Production Levels - Caustic soda production capacity has significantly increased in recent years, with weekly production levels remaining above historical averages despite lower operational rates earlier in the year [8]. - As of August 29, the capacity utilization rate for caustic soda plants with a capacity of 200,000 tons or more was 82.4%, an increase of 3.9 percentage points year-on-year [9]. - Planned maintenance in September may alleviate supply pressures, but the potential for delayed maintenance due to acceptable profit margins could impact future supply dynamics [9]. Price Outlook - The caustic soda futures market is expected to experience continued high-level fluctuations due to mixed factors, including weak cost support and limited downstream acceptance of high prices [9].

Core Viewpoint - Zhengzhou Commodity Exchange announced the implementation of trading limits on caustic soda futures contract 2601, effective from September 1, 2025, during the night trading session [1] Group 1: Trading Limits - The maximum number of contracts that non-futures company members or clients can open in a single day for caustic soda futures 2601 is set at 10,000 contracts [1] - The daily opening trading quantity refers to the total of both buy and sell opening positions in a single futures contract [1] - The limit applies to actual control relationship account groups, which will be executed according to individual clients [1] Group 2: Regulatory Measures - For the first instance of exceeding the trading limit, Zhengzhou Commodity Exchange will impose a regulatory measure of suspending opening positions for no less than 5 trading days [1] - If a non-futures company member or client exceeds the trading limit a second time, the suspension of opening positions will be for no less than 1 month [1] - In cases of severe violations, actions will be taken according to the relevant provisions of the Zhengzhou Commodity Exchange's violation handling measures [1]