Supply and demand increase, soda ash fundamentals improve, and the pattern remains unchanged. Soda ash_Sina Finance_Sina.com

Source: Futures Daily

　　supply decrease demand increase

　　Soda ash is supported by the fundamentals of supply and demand increase. The superimposed inventory continues to decline sharply, the spot is strong, and the disk is significantly more resilient. In the medium and long term, once the recent intensive introduction of steady growth and real estate policy adjustments can drive the recovery of the real estate market, soda ash prices may usher in another round of rises.

Since late April, affected by the domestic epidemic, terminal consumption has been sluggish, market confidence has been low, real estate-related data has continued to decline, and building materials-related varieties, including soda ash, have generally weakened. However, compared with other varieties, soda ash has followed the rebound every time it fell sharply, and its overall performance was relatively resilient, mainly because of its strong fundamentals.

　　Photovoltaic production and summer maintenance form support

The fundamental support of soda ash comes from the expectation of supply reduction and demand increase, the most important of which is the increase in demand brought about by photovoltaic production.PhotovoltaicGlassAs the main raw material of the hot new energy power system in recent years, it has entered a stage of rapid development under the dual-wheel drive of demand expansion and policy support. In 2022, the daily melting volume of photovoltaic glass has increased by nearly 14,000 tons. It is expected that nearly 20,000 tons of production capacity will still be put into operation during the year, which is expected to bring about 600,000 tons of demand for soda ash.

The expected supply reduction stems from the coming of the summer maintenance season for soda ash. From the historical data, after entering May, the operating rate of soda ash will decline seasonally due to the centralized maintenance of the equipment, and the weekly output will drop by 50,000-100,000 tons on average. At present, most caustic soda plants are operating at full capacity. The daily operating rate of soda ash is above 90%, and the production capacity is close to the peak. The stimulating effect of high profits on the release of production capacity has weakened month-on-month, superimposed on the disturbance of subsequent equipment maintenance, and the supply inventory is expected to decrease. The fundamental expectation of soda ash supply and demand increase makes the disk show strong resilience.

　　Macro sentiment and property downturn still need attention

Although the medium and long-term fundamentals of soda ash are relatively good, the changes in macro sentiment and the downturn in real estate still make the disk face certain risks. In late April, the sharp decline of soda ash was partly dragged down by the macro bearish sentiment. The Fed’s interest rate hike came to fruition, the domestic epidemic worsened, and the stock market plummeted and other macro negatives continued to ferment, resulting in a considerable correction in most industrial varieties. As one of the most basic chemical raw materials, soda ash is greatly affected by market sentiment. Recently, the policy of stabilizing economic growth has continued to exert force, and various localities have actively promoted the resumption of production and work, and market confidence has recovered. However, judging from the released data related to credit, social financing and real estate in April, the domestic macro economy has not yet shown obvious signs of recovery, and the market outlook is still uncertain.

The real estate recovery is less than expected, dragging down the soda ash-glass industry outlook. Soda ash glass is in the upstream and downstream of the same industry chain, and the price correlation between the two is relatively high. At present, the price of float glass has been in an oscillating downward trend, mainly because the demand for real estate has not recovered, and the high production capacity and high inventory of the industry have led to continuous price reductions and promotions by glass factories. Under the tone of steady growth, the real estate stimulus policy has been continuously increased, including lowering the down payment ratio, lowering the mortgage interest rate, providing housing subsidies, loosening purchase restrictions and sales restrictions, etc. However, in fact, the demand for glass has not shown a substantial improvement, and it is expected that there will be a Continued to be under pressure, the weakening of terminal real estate demand formed a negative feedback to the middle and upper reaches of the industrial chain, suppressing the upward space of soda ash prices.

　　The game between strong reality of soda ash and weak downstream expectations

Soda plants continued to go to warehouses to support spot market prices. Recently, the inventory of alkali plants has been continuously removed from the warehouse, from a high inventory of 1.3506 million tons in late April to 581,300 tons, with a destocking rate of 56.92%. The large inventory reduction has relieved the high inventory pressure of the alkali plant, and the abundant orders superimposed the low inventory level, which has given the alkali plant the confidence to continuously increase the quotation. It is expected that in the future, under the expectation that the operating rate may decline, the tight supply of soda ash will be difficult to change.

Poor glass will continue to drag on soda ash. The trend of glass is exactly the opposite of that of soda ash. Since September last year, the performance of real estate has been sluggish, combined with the impact of the epidemic, and the production and sales of glass factories have generally been low. At the end of this month, the float glass production line is still planned to be ignited, and the output continues to be released, but the demand has not improved, and the price may continue to be under pressure. The game between the strong reality of soda ash and the weak expectation of downstream glass makes the disk a dilemma.

On the whole, soda ash is supported by the fundamentals of supply and demand increase, the superimposed inventory continues to drop sharply, the spot is strong, and the disk has obvious resistance to decline. However, in the case of the poor real estate market and the continuous decline of glass prices, the price of soda ash is also difficult to rise, and there may still be a short-term sharp decline due to market sentiment. In the medium and long term, once the recent intensive introduction of steady growth and real estate policy adjustments can drive the recovery of the real estate market, soda ash prices may usher in another round of rises.

Responsible editor: Chen Xiulong