Composite Alkali Market Intelligence Report (May 27, 2026)

I. Price Trends
1. Recent Price Volatility
- According to Shengyishe Data, the benchmark price of composite alkali stood at RMB 826.67/ton on May 22, down 7.12% from the beginning-of-month level of RMB 890.00/ton—a notably sharp decline.
- In the chemical sector price monitoring report dated May 11, composite alkali ranked among the top three commodities with the largest price declines (?7.12%), indicating pronounced short-term pricing pressure.
- The winning bid price for Shaoxing Water Treatment Company’s 2025 annual solid composite alkali procurement was RMB 668/ton, reflecting that large-scale project procurement prices are currently at a low level.

2. Regional Price Differentials
- The procurement price for 32% liquid caustic soda in Shandong Province fell to RMB 535/ton—the lowest level in recent years—demonstrating weak pricing of caustic soda (a key raw material for composite alkali), which is being transmitted downstream.
- Composite alkali prices in South China and East China may remain slightly higher than those in Northern China due to differences in logistics costs and regional demand; however, overall price trends remain synchronously downward.

II. Supply-Demand Fundamental Analysis
1. Supply Side
- Persistent Overcapacity Pressure: Caustic soda capacity exceeded 53 million tons in 2025; over 2 million tons of new capacity is scheduled for commissioning in 2026, pushing total capacity to an estimated 56.5 million tons—maintaining a structurally oversupplied market.
- Fluctuating Operating Rates: Industry-wide operating rates declined to 81.2% in May due to a concentrated maintenance period; nevertheless, this remains year-on-year elevated. Weekly output reached 800,000 tons—indicating that temporary supply contraction cannot offset long-term overcapacity.
- Chlor-Alkali Co-Production Impact: High liquid chlorine prices continue to support chlor-alkali enterprises’ profitability. Under the “chlorine-for-alkali” business model, producers exhibit low willingness to proactively reduce caustic soda output—further exacerbating supply pressure.

2. Demand Side
- Core Downstream Weakness: The alumina industry operates at ~80% capacity utilization, with newly commissioned capacity falling short of expectations—diminishing its base demand support for caustic soda. Non-alumina demand (e.g., viscose staple fiber, hardwood pulp) remains predominantly just-in-time, offering little incremental growth.
- Limited New-Energy Demand: Lithium hydroxide operating rates have rebounded to 46%, generating modest incremental demand for caustic soda—but insufficient to reverse the overall bearish trend in the near term.
- Weakening Export Support: Caustic soda export volumes in March did not increase significantly despite Middle East geopolitical tensions. New export inquiries declined month-on-month in April–May, as overseas plants resume operations—eroding China’s global competitiveness.

3. Inventory Pressure
- As of mid-May, sample liquid caustic soda producers across China held inventories totaling 572,300 tons—an increase of 47.36% year-on-year—and reached a multi-year high. Post–Spring Festival “Golden March, Silver April” seasonal inventory drawdown underperformed expectations; persistently high stock levels continue to suppress pricing.

III. Cost and Profitability Analysis
1. Declining Raw Material Costs
- Weak caustic soda pricing directly lowers production costs for composite alkali. For instance, Shandong’s liquid caustic soda price has dropped to RMB 535/ton, providing cost relief to composite alkali producers.
- Although integrated chlor-alkali enterprise profits have softened, sustained high liquid chlorine prices still underpin overall profitability—limiting incentives for production cuts.

2. Diverging Industry Profitability
- Large enterprises achieve cost advantages via economies of scale and process optimization (e.g., China Salt Inner Mongolia Chemical’s natural alkali project), whereas smaller players face mounting losses—accelerating industry consolidation.

IV. Policy and Industry Developments
1. Anticipated “Anti-Intra-Industry Competition” Policy
- At the end of 2025, MIIT proposed phasing out outdated capacity in the caustic soda sector—approximately 6 million tons of facilities over 20 years old. If implemented effectively, such measures could alleviate supply-demand imbalances; however, actual execution intensity remains critical.

2. Corporate Strategic Adjustments
- China Salt Inner Mongolia Chemical is advancing its natural alkali project, establishing a synergistic “natural + synthetic” production framework to lower energy consumption and costs while enhancing competitiveness.
- The industry is shifting toward integrated “materials + application scenarios + services” solutions—enterprises are capturing market share by offering customized products and enhanced environmental application adaptability.

V. Short-Term Outlook (1–3 Months)
1. Price Trend
- Weak and Range-Bound: Facing triple pressures—oversupply, sluggish demand, and high inventories—composite alkali prices are unlikely to rebound, remaining depressed. Shandong’s liquid caustic soda price may test RMB 500/ton.
- Temporary Volatility: June’s seasonal maintenance period may briefly constrain supply and offer mild support; however, absent meaningful demand recovery, upside potential remains highly limited.

2. Key Variables
- Alumina Operating Rates: Should bauxite supply constraints ease and alumina output recover, it could generate incremental caustic soda demand.
- Export Recovery: Recurring Middle East geopolitical tensions may disrupt overseas plant operations; any rebound in Chinese exports would help relieve domestic supply pressure.
- Policy Implementation: The enforcement rigor of the “anti-intra-industry competition” policy will directly influence the pace of capacity rationalization—and thus impact the price equilibrium level.

VI. Medium-to-Long-Term Outlook (6–12 Months)
1. Persistent Overcapacity
- Although caustic soda capacity growth slows to 4.3% in 2026, absolute additions remain substantial, sustaining structural oversupply and continued pricing pressure.
- The industry enters a “thin-margin era,” compelling enterprises to maintain competitiveness through technological upgrades, rigorous cost control, and differentiated operations (e.g., specialty composite alkalis).

2. Demand Structure Optimization
- Emerging sectors—including lithium hydroxide and photovoltaic glass—hold promise for future growth in caustic soda demand; however, their current share remains small, necessitating close monitoring of expansion timelines.
- Stricter environmental regulations are steadily boosting demand for high-efficiency composite alkalis in wastewater treatment and waste incineration applications—creating opportunities for targeted R&D investment.

3. Accelerating Industry Consolidation
- Outdated capacity retirement and strategic expansion by leading players will drive rising industry concentration—shifting market dynamics from “price-based competition” to “value-driven competition.”