In the first half of this year, the market price of caustic soda in China has been on the rise and has surpassed the highest peak in the same period of history. Caustic soda has become the main profitable product of chlor-alkali enterprises. The industry believes that in the second half of the year, if the PVC-based chlorine product market is still no sign of improvement, the domestic caustic soda market will continue the strong market for the first half of the year, even if the price fluctuations are expected to be mostly temporary adjustments. According to analysis, the factors supporting the caustic soda market are mainly concentrated in the following aspects. - Insufficient supply due to underemployment In the first half of the year, the average start-up load of domestic caustic soda enterprises was around 75%. In the second half of the year, it is expected that the start-up of domestic companies' caustic soda plant will remain at a low level. There are three main factors that cause the under-employment of chlor-alkali production equipment and the tight supply of goods in the market. First, in the third quarter, it was the traditional centralized maintenance and repair period of chlor-alkali enterprises. For example, chlor-alkali enterprises in areas with relatively concentrated production capacity in Shandong, Jiangsu, and Inner Mongolia were successively shut down for maintenance; second, the lack of electricity in the south in the southern region restricted the normal start-up of chlor-alkali enterprises; The long-term low level of liquid chlorine, companies for the balance of alkali chlorine considerations, reduce production load, caustic soda market supply in most areas is tight. The liquid chlorine and PVC-based chlorine products market is in the doldrums, and the transaction is not good. It is the main factor that seriously restricts the start-up of chlor-alkali enterprises and promotes the rise of the caustic soda market. The “supplement of chlorine by alkali†has also become a common profit model for enterprises. These factors are expected to continue to exist in the second half of the year, so the situation of underemployment and tight supply will not change. - Delay in the release of new production capacity According to statistics from China's chlor-alkali network at the end of last year, in 2012 China plans to expand production capacity of more than 8 million tons of caustic soda. In the first half of the year, China's new capacity for caustic soda was less than 1.5 million tons. It is expected that more than 3 million tons of caustic soda will be released in the second half of the year Currently affected by the shipment of liquid chlorine, most delays in the commissioning of new expansion projects for caustic soda production. ——The export market continues to stabilise The FOB price of liquid caustic soda exports this year is mainly in the range of US$420 to US$470 per dry ton (main port of China), and the price is stable, showing no sign of falling back. The main reasons are as follows: First, the domestic liquid caustic soda market continues to be highly stable, with obvious liquid chlorine swell reservoirs, the start-up load of business units is reduced, and the supply of caustic soda is limited. Most of the company's supply sources are mainly sold domestically, and the sentiment of export goods is heavy, so the price continues to climb. The second is the cautious operation of merchants entering the market, and they dare not rush to stock the market. The market transactions are mostly based on a single discussion. In the later period, with the high domestic liquid caustic soda prices, the export prices are not likely to be lowered. At the same time, analysts reminded that the caustic soda market also has some unfavorable factors in the second half of the year, which may lead to market volatility. Downstream demand will weaken. Downstream demand for caustic soda is mainly concentrated in alumina, papermaking, printing and dyeing, chemical fiber, and pesticides. Alkali consumption in papermaking has gradually decreased in recent years. The textile industry is also affected by environmental pollution restrictions and poor export conditions. The operating rate of enterprises is low, which reduces the demand for caustic soda. Among them, under the influence of weak demand for textiles at home and abroad, competition in the viscose industry has become more intense, and issues such as raw material resources, product quality, and product structure will continue to plague viscose production enterprises. From the perspective of the alumina industry, due to changes in the bauxite export policy in Indonesia, the amount of imported bauxite in China has declined. Alumina enterprises in Shandong relying on imported ore will be forced to purchase raw materials from the Mainland, but this still does not help ease the overall lack of raw materials. Affected by this, Chinalco plans to reduce its alumina production capacity by 1.7 million tons. In addition, in the second half of the year, the United States plans to put into operation a new caustic soda production expansion project. South Korea’s LG Chemicals will also have 275,000 dry tons of new production capacity put into operation at the end of this year, which will have an impact on the international market. In recent years, the scale of China's caustic soda industry has continued to show a trend of growth, but the simple reproduction of production and operating models has led to a series of problems such as low industrial concentration and structural overcapacity of low-end products after the rapid growth of the industry. Entering the “12th Five-Year Plan†period, policies, markets and other factors will guide the chlor-alkali industry from gradually escaping from the simple growth mode of pursuing scale expansion and entering into a new historical development stage with the core of “adjusting the industrial structure and improving the quality of industry growthâ€. . 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