Everbright Futures 0331 Hotspot Tracking: Fundamentals and macro factors resonate, soda ash continues its weak downward trend

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Ahead of Tuesday’s early trading session, according to the U.S. Wall Street Journal, citing statements from U.S. government officials, U.S. President Trump told his aides that even if the Strait of Hormuz remains closed, he is still willing to end the United States’ military actions against Iran. With Trump repeating TACO, the full suite of chemical-related lines of business in the market are expected to undergo adjustments today, and prices generally move lower. Among them, soda ash fundamentals continue to remain loose; after the level of external disturbance factors being priced in weakens, the downside movement on today’s trading screen expands, with the intraday maximum decline exceeding 3%.

Specifically, on the supply side, in recent days some enterprises have completed maintenance and resumed production. The industry operating rate is 82.80%, up 1.26% month-over-month on a daily basis. Going forward, supply may continue to rebound. On the demand side, performance remains steady-to-dull; downstream procurement efforts have slightly weakened. In addition, downstream soda ash uses—photovoltaic glass and float glass—have continued to see declining capacity, further weakening the level of just-needed demand for soda ash. After replenishment by midstream and downstream players, market demand is not strong enough to absorb supply. Soda ash companies’ orders weaken and they begin to accumulate inventory. On Monday of this week, soda ash companies’ inventory increased by 0.7% compared with last Thursday. Going forward, alkali plants still face high pressure to reduce inventories. It is expected that in the short term, soda ash futures prices may maintain a broad range of sideways volatility. From a medium-term perspective, attention should be paid to whether changes in costs and export expectations can produce substantive effects on the industrial chain. It can also be necessary to monitor changes in the international situation for soda ash, fluctuations in global energy prices, and the overall sentiment in commodity markets.

Source: Wind, Everbright Futures Research Institute

By: Shi Yueming

Practitioner Qualification: F03097365

Trading Consultation Qualification: Z0017563

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