Soda ash in November: Under market competition, it is expected that soda ash will remain stable, moderate, and strong in the short term

Core point: After entering November, the price of soda ash first fell and then rose. The domestic soda ash market continued to be strong, and enterprise prices continued to be high. The focus of transactions has shifted upward, and recently it has been operating in a strong direction. Under the market game, it is expected that the short-term stability of pure alkali will be relatively strong.

As of November 23, 2023, the production of soda ash during the week was 693100 tons, an increase of 33900 tons or 5.14% compared to the previous week. The overall operating rate of soda ash during the week was 89.03%, an increase of 4.35% compared to the previous week.

1、 November Market Review:

In terms of inventory: As of November 23, 2023, the total inventory of domestic soda ash manufacturers this week was 405900 tons, a decrease of 37100 tons compared to the previous week, a decrease of 8.37%. Among them, there are 278300 tons of light inventory and 127600 tons of heavy inventory.

2、 In terms of spot prices

As of November 29th, the spot market has temporarily remained stable in operation. The heavy alkali in North China is stable at 2850 yuan/ton, East China is stable at 2800 yuan/ton, Central China is stable at 2850 yuan/ton, and Northwest is stable at 2570 yuan/ton.

3、 Analysis of the import and export situation of soda ash

In 2022, the prices of international natural gas, coal, and other soda ash raw materials will continue to remain high, highlighting the advantages of domestic soda ash exports. The main reason behind this is the soaring energy prices abroad. In October, the international economic environment weakened, and shipping costs significantly decreased. The export volume of soda ash further reached a monthly historical high. Since November 2022, the import volume of pure alkali in China has reached 12000 tons, a decrease of 68.46% compared to the previous month; The cumulative import volume of pure alkali in China from January to November was 112400 tons, a year-on-year decrease of 48.11%; In November 2022, the export volume of caustic soda reached 195400 tons, a decrease of 11.57% compared to the previous month; The cumulative export volume of caustic soda from January to November was 1.8658 million tons, an increase of 165.03% year-on-year.

According to customs data, in September 2023, China imported 159700 tons of pure alkali, a year-on-year increase of 3295.47% and a month on month increase of 422761.80%; From January to September 2023, the cumulative import of pure alkali was about 36600 tons, a year-on-year increase of 241%, and the import volume increased by about 258800 tons.

According to data from the General Administration of Customs, the export volume of baking soda from China in October 2023 was 54000 tons, an increase of 23.01% compared to the previous month. The import volume of China's soda ash is lower than the export volume, below 400000 tons per year. In 2022, it was only 113800 tons, a year-on-year decrease of 52.09%. From January to May 2023, the import volume of pure alkali in China has exceeded the import volume for the whole year of 2022.

4、 Fundamental Analysis of Related Varieties - Glass

The latest data from the National Bureau of Statistics shows that from January to September, the completed area of houses was 48.705 million square meters, an increase of 19.8%. Among them, the completed residential area was 353.19 million square meters, an increase of 20.1%; As of the week ending October 26, 2023, the total inventory of national float glass sample enterprises was 40.658 million boxes, an increase of 354000 boxes month on month, an increase of 0.88% month on month, and a decrease of 42.5% year-on-year. The average daily production and sales rate of float glass during the week has decreased by 3.5 percentage points compared to the previous period, with production and sales in East and South China still acceptable, and the industry maintaining a state of destocking. At present, photovoltaic glass and float glass are the main sources of incremental demand for soda ash. Overall, the expansion rate of photovoltaic production capacity is not as expected, and the increase in float glass production line is limited. The decline in new construction in the real estate industry has also caused concerns about the demand for glass, resulting in a relatively weak overall demand growth rate. In the medium to long term, it is recommended to focus on the high growth of real estate completion and the driving effect of energy conservation and carbon reduction in the building materials industry on the market.

According to the commodity analysis system of Business Society, the spot price of glass was weak this month. The average price of glass at the beginning of the month was 23.09 yuan/square meter, and the average price at the end of the month was 21.67 yuan/square meter. The price fell within the month, with a magnitude of 6.15%. From a regional perspective, the trading situation of the glass spot market in Shahe, North China is average, with a slight decrease in market prices, which is beneficial for enterprises to reduce inventory. The trading situation in the East China market is relatively light, and downstream demand for goods is still maintained, with a slight decrease in enterprise inventory. The overall production and sales in Central China are still good, and enterprise prices have decreased, resulting in a rapid decline in manufacturer inventory.

4、 Outlook for the future market of soda ash

Entering November, the domestic soda ash market continues to remain strong, with enterprise prices continuing to remain high. Hubei Shuanghuan gradually increases production, while other facilities make slight adjustments and operating rates slightly increase. Coupled with downstream enterprises replenishing their inventory appropriately, demand remains balanced. Under market competition, it is expected that soda ash will remain stable in the short term, but there may be concentrated price hikes by soda ash plants near the end of the year, leading to further increases in spot prices, The situation of widening the basis once again is conducive to the market's rise. Looking at the concentrated replenishment of glass factories, coupled with the gradual replenishment of light alkali downstream, the market has clearly maintained a strong operation. Overall, it is still relatively strong in the medium term. In the future, we will pay attention to the impact of factors such as the production of new production capacity and equipment maintenance by Yuanxing. At the same time, we are also wary of false information released by the market. We suggest that investors pay attention to identifying the extreme impact of false information on the market.