When will the crazy trend of soda ash end due to tight supply and significant increase in spot prices?

Tight supply leads to a significant increase in spot prices,
When will the crazy trend of soda ash end?

In recent times, both spot and futures prices of soda ash have performed extremely wildly, with significant price fluctuations. Among them, spot prices have continued to be strong and are gradually approaching the historical high of 2021. From the perspective of supply and demand, the reason for this is that, firstly, soda ash maintenance and some enterprises have seen a significant decrease in production and construction due to environmental protection, with monthly production dropping to below 80% in August, and new equipment production falling short of expectations, Causing the expectation of loose supply to become a reality of supply shortage; The inventory of the second downstream raw material, soda ash, is too low and has been continuously compressed to a low level in the early stage. However, the expectation of increased supply is delayed. In addition, the overall downstream demand for soda ash is steadily increasing, leading to a high purchasing sentiment in the downstream. The inventory of soda ash plants has continued to decline for 11 weeks, falling to a historical low. At present, in the situation of tight supply and strong demand in the spot market for soda ash, prices remain high and fluctuate at high levels, while futures have begun to decline. Can spot prices continue to rise in the future? When will the strong spot market pattern come to an end?

Supply is the biggest factor affecting the trend of soda ash this year, especially the production progress of Yuanxing Energy, which is the most uncertain factor that disrupts the market trend. Yuanxing Energy's production progress is seriously lower than the early market expectations. In addition, due to high profits this year, the first half of the year was basically fully opened, resulting in many alkali plants experiencing problems and sudden short stops under high temperatures in summer. In addition, the environmental protection incident in Qinghai, The combined production capacity of Fatou and Kunlun alkali plants is 2.8 million tons, with reduced load operation. The supply shortage has further intensified, resulting in a serious supply-demand imbalance in the pure alkali market since August, with weekly production continuing to be below 600000.

Entering September, the maintenance of soda ash enterprises is coming to an end, and there is an expectation of an increase in supply; Before early September, the maintenance and resumption of production of soda ash enterprises were synchronized, with narrow fluctuations in production and start up. After entering mid to late September, the maintenance was basically completed. In addition, Yuanxing Energy Line 2 has recently started feeding, and the overall start up and production have gradually increased. Therefore, in September, soda ash is in the process of supply recovery. However, whether it can change the current situation of supply shortage, resulting in a significant uncertainty in the re accumulation of alkali plant inventory, However, from the perspective of the production progress of Yuanxing Line 1, the period for Line 2 to reach full production may be too long. Therefore, the supply of caustic soda is likely to be tight throughout September. In the medium to long term, with the end of the mid-term maintenance season and the continuous release of new production capacity and import volume, the supply and demand pattern of caustic soda will tend to be loose. The specific timing needs to continue to pay attention to the production progress and rhythm of Jinshan and other Yuanxing production lines.

From the demand side, the downstream demand for the entire soda ash industry is basically stable and increasing. Float glass has benefited from the change in national real estate policies and attitudes, and the supply and demand of float glass have been restored. The daily melting capacity has also increased from 160000 tons at the beginning of the year to around 170000 tons at present. Recently, the production and sales of float glass have improved, and market sentiment has improved. Spot prices of float glass enterprises have increased, and short-term spot prices are relatively strong. Raw material soda ash inventory is not high. The production capacity growth rate of photovoltaic glass is expected to be over 40% this year, and the daily melting capacity is likely to exceed 100000 tons by the end of the year, which is also the largest increase in demand for soda ash this year.

Since the beginning of this year, domestic soda ash inventory has been relatively low in terms of inventory. Since May, domestic soda ash production enterprises have clearly started the process of reducing inventory at a low level. As of September 7th, the total inventory of domestic soda ash manufacturers was 124700 tons, a month on month decrease of 16600 tons, a decrease of 11.75%. Inventory data has decreased for the 11th consecutive week, including 71800 tons of light soda ash, a month on month decrease of 12800 tons, and 52900 tons of heavy soda ash, a month on month decrease of 0.3800 tons. The light and heavy prices have fallen synchronously, with most enterprises having low inventory. The overall inventory of alkali plants is at a historical low, and downstream glass factory inventory has also dropped to the extreme low value of less than 10 days. Delivery warehouse inventory is also at an extremely low level, and the number of orders waiting to be issued by pure alkali enterprises continued to increase during the week, approaching 20 days. In the downstream peak season and extremely low absolute inventory levels, the restoration of soda ash inventory still requires a process.

Overall, the current spot prices are temporarily stable, with a strong high level; The increase in supply side operating rate is slow, and it is necessary to pay attention to the time when the shortage of pure alkali spot will ease. Although there is an expectation of an increase in supply in September, it is difficult to effectively alleviate the situation of supply shortage. The traditional peak season of "nine gold and ten silver" in the downstream of the demand side has begun, coupled with the continuous favorable policies in the real estate industry in recent times, the market generally expects the demand for glass and other products to further improve. In addition, due to the impact of the National Day holiday in the later period, downstream enterprises will have a demand for early stocking. Therefore, there has not been a significant change in the current supply and demand of soda ash, and the phenomenon of low inventory in the industrial chain and tight market supply still exists. In the short term, with the support of tight supply and good demand, the price of soda ash may continue to maintain a high and strong trend, but futures are beginning to fall, and it is difficult for spot prices to continue to rise. In the medium to long term, with the realization of production by Yuanxing and Jinshan, and the end of the peak maintenance period, pure alkali is expected to alleviate the shortage of spot goods in October. It is highly likely that spot prices will fall back