Soda futures continue to rise
The price of soda ash futures rose for the eighth consecutive trading day, with the main intraday increase exceeding 3%, reaching the highest point of 1964 yuan since March 7. This round of price increase is mainly influenced by the domestic macroeconomic data. The overall atmosphere of the chemical sector has warmed up, and some soda enterprises have closed orders or temporarily reduced production, which has promoted the continuous rise of the futures price. Market bulls actively followed up and market sentiment was boosted.
Huawen Futures Investment Research Team pointed out that the current price of soda ash futures is close to the cost line of high-cost ammonia-alkali method, which has formed a certain supporting role. Some soda production enterprises have planned to close orders or temporarily reduce production and adopt the strategy of price protection. Recently, maintenance and resumption of production coexist, supply disturbance is enhanced, and the price fluctuation of soda ash is intensified. In addition, the production and sales of downstream float glass rebounded, the demand for replenishment increased, the tentative price increase in Shahe area, the upward price of photovoltaic glass, and the commissioning of new production capacity all supported the spot and futures prices of soda ash.
In the spot market, the domestic price of soda ash fluctuated and adjusted, and some enterprises closed orders and raised prices at low prices. China National Salt Kunshan gradually resumed production, and the supply side fluctuated and adjusted, and the enterprise mainly delivered goods. The downstream demand fluctuates little, and the market sentiment is cautious. It is expected that the soda ash market will remain stable and volatile in the short term.
On the supply side, some soda plants have been overhauled recently, which has eased the supply pressure. The adjustment of the cost of soda ash and the price of raw materials led to the differentiation of profits of different methods. The profit of ammonia-alkali method increased by 9.48 yuan/ton, while the profit of combined alkali method decreased by 45 yuan/ton. Despite the suspension of maintenance of some units, the operating rate of domestic soda ash still fell to 83.50%, and the output decreased last week, and the overall supply pressure was eased.
On the demand side, the demand of soda ash market has been sluggish recently, new orders have slowed down, and the market has a strong wait-and-see mood. However, some downstream banks have replenishment plans, and the overall demand remains stable. Although the downstream quotation stabilized, the transaction performance was weak.
The data shows that as of April 7, 2024, the total inventory of domestic soda ash manufacturers was 916,800 tons, an increase of 41,800 tons from the previous month or 4.78%. Among them, the light inventory is 370,000 tons, and the heavy inventory is 546,800 tons. This state of accumulation has put pressure on the market mentality, and the market wait-and-see mood has intensified.
Analysts believe that the current soda ash futures price is supported near the cost line of high-cost ammonia-alkali method. Some production enterprises adopt the plan of sealing orders and temporarily reducing production, and have the strategy of insuring prices. The supply disturbance is enhanced, and the price fluctuation of soda ash is intensified.
Huawen Futures Investment and Research Team predicts that the soda ash signing is still dominated by light soda in the near future. After the replenishment in the early stage, with the new production capacity put into production, the soda ash market as a whole is weak and difficult to change. The contradiction between strong supply and weak demand is obvious, and the accumulated pressure increases. Even if there is a rebound, it may only be a short-term phenomenon, and it is difficult to form a trend reversal. The cost line of ammonia-alkali process will continue to support the current price of soda ash. In the near future, soda ash futures may fluctuate widely near the cost line of ammonia-alkali method, so investors should enter the market cautiously.
The market pays attention to the US inflation data and the minutes of the Fed meeting.
While evaluating the economic situation and interest rate prospects, investors are also paying close attention to the US inflation data in March. Recent non-farm payrolls data and comments from Fed officials have made investors doubt about the time and frequency of interest rate cuts this year.
The non-farm payrolls report released last Friday far exceeded expectations, showing the resilience of the labor market. Minneapolis Fed President Kashkali said that according to the economic development, interest rates may not be cut this year.
The consumer price index (CPI) of the United States in March will be released at 20:30 tonight. Economists expect the monthly rate of CPI to increase by 0.3% and the annual rate to increase by 3.7%. Higher-than-expected data may aggravate people’s concerns about long-term high interest rates and reduce the market’s expectation of the Fed’s interest rate cut.
If the inflation data is higher than expected, it may aggravate the market’s worries about inflation, and the pace of interest rate cuts by the Federal Reserve may be hindered. Precious metals such as gold and silver may maintain linkage with the US dollar, showing an upward trend. If the inflation data is lower than expected, it may accelerate the pace of the Fed’s easing policy. The expectation of interest rate cuts in June may heat up, the US dollar may be under pressure, and precious metals such as gold and silver may maintain an upward trend. Of course, investors are not excluded from selling safe-haven assets such as gold and turning to high-risk assets such as stocks. At that time, gold and silver may fall under pressure.
In addition, the minutes of the Fed’s latest monetary policy meeting will be released at 2:00 am Beijing time on Thursday. At the meeting in March, the Federal Reserve kept the interest rate in the target range of 5.25%-5.50% for five consecutive meetings. Economists believe that Federal Reserve Chairman Powell’s speech at the meeting is biased towards doves, and the bitmap shows that officials think that interest rates may be cut three times this year. Prior to this, economists expected the Fed to reduce its forecast of interest rate cuts this year to two.
The minutes of the upcoming meeting will reveal the Fed’s discussion on the table reduction plan. At the beginning of the epidemic, the Federal Reserve purchased a scale of 5 trillion US dollars.
