Recently, the domestic liquid caustic soda market has experienced flat trading volumes. Squeezed by a phase of weak demand, producers in various regions have adopted diverging operational strategies, with some plants cutting back production due to margin pressures.

I. Weekly Spot Price Overview: Prices Bottoming Out with Minor Adjustments

Domestic liquid caustic soda prices have remained at low levels:

• 32% Liquid Caustic Soda: The average spot market price was recorded at 704 RMB/ton, down slightly by 0.28% compared to the beginning of the month.

• 50% Liquid Caustic Soda: The average spot market price slipped to 1,207 RMB/ton, representing a marginal decrease of 0.25% from the start of the month.

Overall, the market is currently consolidating at its bottom range.

II. Regional Market Dynamics

• North China (Shandong): The market in Shandong experienced a trajectory of bottoming out before recovering. Earlier this month, purchasing prices from major alumina refineries adjusted downward, accumulating a drop of 15 RMB/ton. This, combined with negative margins caused by steep discounts on liquid chlorine, prompted concentrated production cuts among regional chlor-alkali enterprises. As supply tightened, manufacturers showed less interest in shipping to low-bidding refineries. Supported by the lower supply, some producers managed to modestly raise their quotes. However, due to weak purchasing sentiments from non-alumina buyers, plant inventories climbed, with the folded-100% inventory in Shandong rising by 12.58% week-on-week.

• Northeast China: The market trended downward. Prices in Liaoning slipped early in the month due to falling prices in neighboring Shandong and the restart of previously offline units. As margins shrank, regional producers focused on maintaining stable prices. In Heilongjiang, chlor-alkali plants operated below capacity, suspending evaporation units and focusing primarily on 32% concentration shipments; order prices here softened slightly under regional downward pressure.

• East China: Market performance was mixed. In Zhejiang, as prices touched bottom and producers faced losses, plants lowered their operating rates, gradually pushing offer prices upward. Conversely, trading in Jiangsu remained subdued, resulting in minor isolated downward adjustments. In Fujian, operating rates stayed low, limiting available spot supply, which kept local prices stable at low levels.

• South and Southwest China: New transactional volumes moved lower. Weak pricing in outer regions exerted negative pressure locally, and with minimal support from downstream consumption, transaction prices adjusted downward to secure volumes.

III. Market Outlook: Low-Level Consolidation and Supply-Demand Tug-of-War

Looking ahead, the liquid caustic soda market will continue to navigate the balance between supply adjustments and quiet demand:

• Supply Side: Although large-scale maintenance schedules are limited for the remainder of the month, poor margins may lead to further voluntary load reductions by producers. Overall, market supply is expected to remain relatively sufficient.

• Demand Side: Downstream alumina refineries are expected to run steadily, procuring raw materials primarily on an as-needed basis. In contrast, non-alumina sectors show little sign of short-term improvement, with mid-summer high temperatures further suppressing operating rates and weakening overall caustic soda consumption.

Summary:

The liquid caustic soda market is projected to fluctuate at lower levels in the near term. While downstream demand remains flat, potential production cuts to ease local inventory pressures—combined with low liquid chlorine prices—could offer a degree of supply-side support, potentially driving modest price increases in certain regions. The adjustment range is expected to be around 30 RMB/ton. Meanwhile, regions highly dependent on alumina consumption will likely maintain stable trends, with market participants advised to closely monitor the settlement of monthly contracts.