NAV

Summary: On Feb 9, 2026, the main Caustic Soda futures contract (SH2603) rose by 2.65%. Wuxi High Mountain Hi-tech Development Co., Ltd. analyzes that the collapse in Liquid Chlorine prices has deepended losses for producers, triggering strong expectations for equipment maintenance and price rebounds.

1. Market Movement: Futures Rise Amid Short Covering

On February 9, the Caustic Soda SH2603 contract closed at 1,937 RMB/ton, up 2.65%. While the futures price climbed, the spot market remained soft, with Shandong 32% Liquid Alkali at 1,838 RMB/ton (100% basis). This divergence led to a widening negative basis, indicating that the futures rally is primarily driven by shifting expectations rather than immediate spot shortages.

2. Strategic Analysis: The Liquid Chlorine Factor

The core driver of this rally is the "Chlor-Alkali Profit Seesaw":

• Profit Inversion: In mid-January, high Liquid Chlorine prices (350 RMB/ton) helped producers remain profitable despite falling alkali prices. However, on Feb 9, Liquid Chlorine in Shandong plunged to 50 RMB/ton, sending theoretical profits into negative territory.

• Maintenance Expectations: While current operating rates remain high at 89.66%, prolonged losses have fueled market speculation that large-scale maintenance shutdowns will occur in March and April.

• Inventory Pressure: Post-holiday inventory levels are expected to remain high, creating a tug-of-war between "low production profits" and "high seasonal stocks."

3. Impact on High Mountain's Core Portfolio

As a specialized exporter of Chloroacetic Acid (MCAA), Sodium Formaldehyde Sulfoxylate (SFS), and PVC Paste Resin, Wuxi High Mountain monitors these fluctuations closely:

• MCAA: As a primary consumer of caustic soda, MCAA production costs are directly sensitive to alkali price swings.

• PVC Resin & SFS: The stability of the PVC supply chain is intrinsically linked to the chlorine-alkali balance. Our global logistics team ensures that even during market volatility, our clients receive consistent supplies.

4. Outlook for 2026: Execution is Key

Wuxi High Mountain believes the sustainability of this rebound depends on the actual implementation of maintenance plans.

• If the scale of shutdowns in March/April is limited, the high inventory of caustic soda will likely exert downward pressure on prices again.

• We will continue to track the operational decisions of major Chinese chlor-alkali producers to provide our global partners with precise market intelligence.