1. Since 2022, the price of caustic soda has continued to rise and is still in the upward channel. As of April 15, 2022, the average market price of caustic soda (32% ion-exchange membrane) was 1308 yuan / ton, an increase of 342.4 yuan / ton or 35.5% over the beginning of the year; The average market price of caustic soda (99% flake soda) was reported at 4224 yuan / ton, an increase of 784 yuan / ton or 22.8% over the beginning of the year. In the past week, caustic soda (32% ionic membrane) rose 2.8% and caustic soda (99% flake caustic soda) rose 4.1%. The accelerated release of alumina production capacity in the downstream drives the growth of caustic soda demand. Alumina is the largest application field in the downstream of caustic soda, accounting for about 29.3% of the total consumption of caustic soda. Recently, thanks to the accelerated release of alumina production capacity, the demand for caustic soda has continued to grow. From 2020 to 2022, China's effective alumina production capacity was 87.84 million tons, 89.24 million tons and 97.74 million tons respectively, with a compound annual growth rate of 5.5%. Especially since the beginning of 2022, alumina production capacity has increased by 9.52% year-on-year, reaching a new high in recent five years. Under the background of "double carbon" and "double control of energy consumption", the new capacity of caustic soda will be limited in the future. In November 2021, the Ministry of industry and information technology issued the industrial green development plan for the 14th five year plan, which pointed out that the new capacity of caustic soda and other industries should be strictly controlled, and the new projects should be replaced with the same or reduced capacity. In 2021, China's caustic soda production capacity was originally planned to increase by 1.11 million tons, but the actual increase was 350000 tons, with a realization rate of less than one third. At present, the inventory continues to run at a low level. As of April 15, 2022, China's liquid alkali inventory has been reported as 167000 tons, which is at an all-time low, about 63% of the high inventory in recent three years. Since the second half of 2021, China's liquid alkali inventory has been at a low level of less than 170000 tons. The continuous low inventory operation reflects the high demand for caustic soda, the higher shipment volume of enterprises and the tight supply of caustic soda, supporting its high price operation. Under the background of downstream demand support and limited supply, the price of caustic soda may continue to rise in 2022, and the business cycle of the industry is expected to be prolonged.
2. As of April 15, 2022, the price index of China's chemical products reported 5763 points, down 0.9% on a weekly basis. Chemical products were mixed, with diammonium phosphate up 5.4% and polymerized MDI down 4.0%. In terms of diammonium phosphate, the price rise is due to the stable, medium and strong operation of the upstream raw material phosphorus ore market, and the high cost price of diammonium phosphate is strong, supporting the high market price. In terms of aggregated MDI, the main reason for the price decline is that it is difficult to deliver goods from Shanghai under the influence of the epidemic, resulting in inventory backlog, low production enthusiasm of downstream household appliance enterprises, and the overall demand has declined compared with the same period last year.
3. Over the past week, international crude oil prices have risen sharply. As of April 14, 2022, the main continuous futures price of Brent crude oil was reported at US $111.7/barrel, up 8.7% on a weekly basis, and the settlement price of main continuous futures of WTI crude oil was reported at US $107.0/barrel, up 8.8% on a weekly basis. The main reasons for the rise in crude oil prices are: on the one hand, the negotiations between Russia and Ukraine have reached an impasse, and Russia's crude oil production has decreased due to sanctions; On the other hand, OPEC said it would not increase production to support crude oil and make up for the loss of Russia's 7 million barrels of oil and other liquid energy exports per day, which exacerbated market concerns and increased the volatility of international oil prices.
4. Market review. Last week, among the 33 tertiary sub industries of CITIC chemical, 3 sectors rose or remained flat, and 30 sectors fell. Among them, the soda ash sector increased the most, with an increase of 6.1%; Titanium dioxide sector fell the most, with a decline of 14.4%. In terms of individual stocks, the top three weekly gains were Shandong Haihua Co.Ltd(000822) , Ningbo Tianlong Electronics Co.Ltd(603266) , Cnsig Inner Mongolia Chemical Industry Co.Ltd(600328) , with weekly gains of 25.4%, 18.2% and 13.6% respectively; The top three weekly declines were Poly Union Chemical Holding Group Co.Ltd(002037) , Hubei Forbon Technology Co.Ltd(300387) , Hangzhou Todaytec Digital Co.Ltd(300743) , with weekly declines of 33.3%, 23.1% and 21.7% respectively.
Investment advice
Under the rising price of caustic soda and the prosperity of the industry, relevant production enterprises may benefit, such as Shanghai Chlor-Alkali Chemical Co.Ltd(600618) , Xinjiang Tianye Co.Ltd(600075) , Inner Mongolia Junzheng Energy & Chemical Group Co.Ltd(601216) , etc.
Risk tips
Abnormal fluctuations in caustic soda prices, repeated outbreaks in China, and upgrading of safety and environmental protection policies.
