Northeast: The newly added production capacity of caustic soda is still under pressure, and the era of dual carbon is waiting for a new cycle.

Northeast's research report states that the current price and profit level of the caustic soda industry are at a relatively low level: Since 2022, the domestic caustic soda industry has entered a new round of capacity release cycle, with high industry inventory and downward pressure on caustic soda prices. As of May 8, 2026, the domestic caustic soda gross profit is 737 yuan/ton, which is at the 27th percentile since 2020. Looking ahead, the pressure of new caustic soda capacity release still exists, but considering that caustic soda is a high-energy-consuming product, the actual deployment intensity is expected to slow down under the background of the continued advancement of the dual-carbon policy. It is also expected that small and medium-sized outdated capacity will gradually be phased out. From the demand side, with the growth of non-aluminum demand such as alumina and new energy, the overall demand for caustic soda is expected to maintain steady growth, and the industry supply-demand structure is expected to be optimized, with caustic soda product prices and profit levels expected to rebound into the rising range after hitting rock bottom. The main points of Northeast are as follows: Shanghai Chlor-alkali Chemical's main products are caustic soda and polyvinyl chloride, which are widely used in various sectors of the national economy. The chlor-alkali industry uses salt and electricity as core raw materials to produce caustic soda, hydrogen, and chlorine gas through the electrolysis of saturated brine. According to Baichuan Yingfu data, caustic soda and chlorine gas are produced in a fixed proportion of about 1:0.88. Since chlorine gas is a highly toxic and high-risk chemical that is difficult to store and has high transportation costs, companies usually extend the industrial chain to produce chlorine-consuming products such as PVC, forming a supporting industry for the chlor-alkali industry. The chlor-alkali industry, as a basic chemical material product, is widely used in petrochemical, light industry, textiles, building materials, metallurgy, and other fields, occupying an important position in the national economic development. Supply: By 2025, domestic capacity will account for nearly 50%, and in the long term, the release of new capacity is expected to be restricted under the background of continued advancement of the dual-carbon policy. (1) By 2025, domestic caustic soda capacity and production will reach 51.51 million tons and 46.54 million tons, respectively. After more than twenty years of rapid development, domestic caustic soda accounts for nearly 50% of global capacity; (2) From the perspective of the industry competitive landscape, since 2016, the domestic supply-side reform and the advancement of the dual-carbon policy have led to outstanding cost and risk resistance capabilities for leading enterprises with self-generated energy and the full industry chain. Small and medium-sized enterprises are accelerating their exit under pressure in energy consumption, environmental protection, and profitability. By 2025, there are 29 enterprises with caustic soda production capacity of 500,000 tons or more, accounting for 42% of the capacity; there are 23 enterprises with production capacity of less than 100,000 tons, accounting for 2%. The industry concentration continues to increase, but overall it remains relatively low. Looking ahead, the release of new caustic soda capacity is expected to be restricted under the background of stricter environmental regulations. Demand: Alumina and non-aluminum demand, such as new energy, continue to drive demand growth. (1) By 2025, alumina remains the largest downstream of caustic soda, accounting for 28%, with the continuous expansion of alumina capacity driven by aluminum product consumption, contributing stable increment to the demand for caustic soda. According to SMM data, from 2021 to 2025, domestic alumina production will increase from 72.16 million tons to 89.42 million tons, with a compound annual growth rate of 5.5%; (2) In terms of non-aluminum demand, the new energy sector contributes the most marginal increment. Caustic soda, as a key auxiliary material in the industry chain, is used in the preparation of ternary precursor, lithium iron phosphate production, and wastewater treatment. With the continuous expansion of the market size of new energy vehicles, consumer electronics, and electric bicycles, the demand for caustic soda in the lithium battery industry will continue to grow, becoming an important demand support for the caustic soda market; (3) In terms of exports, in recent years, companies participating in international competition have become one of the strategic important directions for the caustic soda market. By 2025, China's cumulative caustic soda exports reached 4.11 million tons, a significant year-on-year increase of 33.43%, of which solid caustic soda exports reached 671,500 tons, a year-on-year increase of 42%, and liquid caustic soda exports reached 3.4373 million tons, a year-on-year increase of 32%. The proportion of domestic caustic soda exports has increased significantly from 3.17% in 2020 to 8.84% in 2025, becoming an important increment driving the growth of the caustic soda industry. Risk factors: Downstream demand falls short of expectations; fluctuations in raw material and energy costs.