CITIC Futures: March 18 Energy Chemical Morning Report

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Rubber: Increased Volatility

On Monday, domestic full latex was priced at 16,700 RMB/ton, up 100 RMB/ton from the previous day; Thai No. 20 mixed rubber was 15,650 RMB/ton, also up 100 RMB/ton from the previous day.

Raw Material Side: Thai rubber sheet closed at 72.3 THB/kg, up 1.3 THB/kg from the previous day; Thai cup rubber was 58.2 THB/kg, up 0.2 THB/kg. Yunnan has halted tapping; Hainan has halted tapping.

As of March 15, 2026, total inventory of TDR and general trade in Qingdao was 677,600 tons, a decrease of 2,800 tons or 0.42% from the previous period. Bonded zone inventory was 121,300 tons, up 1.43%; general trade inventory was 556,300 tons, down 0.81%. The import rate of bonded warehouses for natural rubber samples in Qingdao increased by 1.71 percentage points, and the outbound rate increased by 1.71 percentage points; the import rate of general trade warehouses increased by 1.37 percentage points, and the outbound rate increased by 2.22 percentage points.

Opinion: As global central banks follow the Federal Reserve into a rate-cut cycle in 2026, the previously suppressed global tire industry growth due to “reciprocal tariffs” in 2025 shows signs of wavering. Natural rubber prices are expected to rise sharply in the short term, driven by demand growth expectations. Market expectations are high, and the short-term endpoint is unpredictable. Therefore, it is reasonable to expect that RU & NR still have room to rise in the short term, while in March, with more frequent declines, a short-term correction may occur (Note: If market expectations persist until the end of March, the pattern may be broken).

(Cai Wenjie, Futures Trading Consulting License: Z0022568, for reference only)

PX:

Supply and demand both decrease. Due to concerns over upstream raw material supply stability, some PX units in China have taken preventive reduction measures. The industry load in China decreased by 5.8 percentage points to 84.6%, and in Asia by 6.3 percentage points to 76.9%, still relatively high historically. Attention should be paid to domestic refineries’ “oil preservation and chemical reduction” situation. On the demand side, as PTA maintenance units restart as planned, April production will increase significantly. PX fundamentals remain relatively strong in the industry chain. With the start of maintenance season for PX units, inventory is expected to shift from accumulation to reduction starting in March. U.S. API weekly crude oil inventories unexpectedly increased. Iranian President confirmed the assassination of former Speaker Larijani. Meanwhile, due to cold reception of allies’ escort invitations, U.S. allies are reluctant to participate in the Strait of Hormuz escort, leading President Trump to criticize allies and threaten to withdraw from NATO. As a result, Brent crude oil prices remain volatile at high levels. Given that transportation through the Strait of Hormuz still needs observation, and U.S. Defense Secretary has agreed to deploy Marine Expeditionary Units to the Middle East, there is still upward risk for oil prices. In the short term, due to logistics disruptions and refinery reductions, supply gaps in the domestic chemical market have become a reality. Attention should be paid to CDU unit reductions in Korean refineries. PX prices for May are expected to fluctuate higher due to rising costs and supply contraction, with support around 9500-9800. The PX 5-9 month spread below 400 is suitable for buying on dips.

(Li Sijin, Futures Trading License: Z0021407, for reference only)

PTA:

Supply decreases and demand increases. Due to Jiaxing Petrochemical’s unexpected shutdown, PTA industry load decreased by 3.7 percentage points to 77.3%, reaching a neutral level for the year. On the demand side, raw material prices surged, but terminal orders are sluggish. Terminal factories are gradually resuming operations, with some reducing load, as high raw material prices restrict downstream restart progress. The restart time is expected to be delayed further from pre-holiday levels. Polyester industry load increased by 2.6 percentage points to 86.7%, but some units have not fully recovered. The PTA supply-demand outlook for March is improving. Overall, the market is balancing between strong cost support and negative demand expectations, causing PTA futures to fluctuate sharply around 7000 RMB. Supported by fundamentals, TA for May can still be bought on dips, with support around 6600-6800.

Related Market News (Source: Chemical Fiber Information Network)

Production and Sales: Jiangsu and Zhejiang polyester filament production and sales remained dull on Tuesday, with average sales below 20% by 4 PM.

(Li Sijin, Futures Trading License: Z0021407, for reference only)

EG:

Supply decreases and demand increases. Domestically, ethylene glycol industry load decreased by 7.7 percentage points to 66.4%, with synthetic gas-based EG load down 9.3 percentage points to 73.7%, still high for the season. Due to raw material supply issues, the operating rates of oil-based EG producers have declined to varying degrees. Profits for synthetic gas-based EG have recovered significantly as EG prices rise; whether delayed maintenance or increased production will occur remains to be seen. After March, with the start of spring maintenance and catalyst replacement for synthetic gas units, and the peak season approaching, the industry may see a phased improvement. Additionally, transportation disruptions of Middle Eastern imports further deepen the de-stocking of ethylene glycol in April. Since supply gaps are now a reality, and transportation through the Strait of Hormuz remains uncertain, supply disruptions continue to support the market. Last night, affected by Shenghong’s MTO unit startup, methanol prices rose sharply. Compared to oil-based routes, synthetic gas-based EG also has cost advantages. In the short term, EG prices for May are expected to fluctuate higher, supported around 4500-4700. The 5-9 month spread below 100 is suitable for buying on dips.

(Li Sijin, Futures Trading License: Z0021407, for reference only)

PF:

Supply and demand both increase. Spinning short fiber production load increased by 2.1 percentage points to 86.8%, with some downstream units gradually restarting as planned, bringing industry operating rates to a neutral level for the season. Demand is limited as some downstream units are not yet operational, and terminal orders are slow. Meanwhile, rising costs suppress downstream procurement, leading to reduced market transactions, with downstream mainly working to clear inventories. Polyester filament load increased by 6.0 percentage points to 59.0%, but market expectations suggest downstream demand may struggle to absorb rising costs, putting short fiber processing margins under pressure. Overall, cost support remains, and PF June futures are expected to fluctuate with raw material prices, supported around 7900-8100.

Related Market News (Source: Chemical Fiber Information Network)

Production and Sales: On Tuesday, direct-spun polyester filament factories showed mixed sales, with average sales around 44% by 3 PM.

(Li Sijin, Futures Trading License: Z0021407, for reference only)

PR:

Marginal improvement in supply and demand. On the supply side, bottle chip industry load is estimated at 71.9%, up 2.4 percentage points, due to successive announcements of force majeure or delayed performance, with major factories reducing contract volumes. Supply remains strong, and spot basis for bottle chips has strengthened. On the demand side, the terminal market is in peak procurement season, with soft drink demand peaking in summer. Domestic factories usually place orders in March-April, and downstream operating rates continue to recover. Overall, supported by cost factors and strong supply, PR prices are expected to outperform other polyester products significantly. Support zone: 8300-8500. Watch for opportunities to go long PR and short PF, with a focus on short-term arbitrage in May-June, and actively sell short positions for PR May and June futures.

(Li Sijin, Futures Trading License: Z0021407, for reference only)

Soda Ash:

On Tuesday, soda ash futures declined slightly, with spot prices stable or falling. The commodities market showed mixed gains and losses, with moderate market sentiment. Recently, soda ash maintenance has been limited; last week, output increased by 0.2 million tons to 8.09 million tons, reaching a new high, with supply pressure evident. Downstream demand is temporarily stable. Latest inventory at soda ash plants decreased by 2.8 million tons to 19.03 million tons, while delivery warehouse stocks increased by 0.1 million tons to 2.78 million tons. Last week, two float glass lines were shut for maintenance, and one was fired up; no change in photovoltaic glass lines. Recently, combined daily melting volume of float and PV glass slightly declined, with lower demand for heavy alkali and stable demand for light alkali. Downstream procurement remains moderate. December imports of soda ash slightly increased to 3,500 tons; exports rose to 232,700 tons. Macroeconomically, recent domestic real estate sales data increased month-on-month but remain below last year’s levels; international macro impacts are neutral (dollar index decline, ongoing geopolitical concerns); domestic policy disturbances have eased. Overall, short-term supply remains high, demand is stable, and market sentiment is volatile, so soda ash remains in a state of oscillation. On Tuesday, soda ash warehouse receipts decreased by 120 to 1,949.

In the short term, soda ash futures are expected to fluctuate within a range, with increased volatility. SA2605 intraday reference: 1230-1260.

(Hu Peng, Futures Trading License: Z0019445, for reference only)

Glass:

On Tuesday, glass futures declined slightly, with spot prices mainly stable. In the short term, supply and demand are both weak, but supply pressure has eased. Last week, glass output decreased, and downstream procurement increased, leading to a rise in inventory, which decreased by 189,000 tons to 3,793,000 tons year-on-year increase of 8.0%. Last week, two float glass lines were shut for maintenance, and one was fired up; no change in glass cold repair lines this week. Recently, daily melting volume of glass decreased, with the latest at 145,725 T/D, down about 8.2% year-on-year. From January to February, domestic housing completion area fell 27.9% year-on-year (widening decline). Recent real estate sales data increased month-on-month but remain below last year’s levels. Latest glass deep-processing orders decreased by 2.9 days to 6.4 days. Short-term supply declines, demand drags prices, and futures are generally weak and volatile.

Short-term glass futures are expected to fluctuate weakly, FG2605 intraday reference: 1080-1110.

(Hu Peng, Futures Trading License: Z0019445, for reference only)

Polyolefins: Production Cut Expectations, Still Slightly Strong in Short Term

As of March 17, the main contract closed down 181 RMB/ton to 8,496 RMB/ton. LLDPE East China basis strengthened by 5 RMB/ton to 119 RMB/ton; PP main contract down 186 RMB/ton to 8,671 RMB/ton; filament East China basis strengthened by 82 RMB/ton to -2 RMB/ton.

In the short term, polyolefin prices are driven by rising costs and logistics risk premiums. Geopolitical conflicts lead to expectations of significant price increases in upstream raw materials like crude oil and methanol. The strategic position of the Strait of Hormuz suggests possible logistics disruptions, leading to supply contraction expectations. Price fluctuations depend on further geopolitical developments. Given the current blockade of the Strait, prices are expected to remain relatively strong under logistics risk premiums.

Opinion: Slightly bullish but with high-risk of pullback, avoid chasing longs. L2605 and PP2605 contracts are expected to trade within 6800-9000 RMB/ton.

(Ouyang Yuke, Futures Trading License: Z0023259)

Caustic Soda:

As of March 17, the main contract SH2605 closed down 24 RMB/ton to 2,523 RMB/ton. Main transaction prices in Shandong for 32% ion-exchange membrane caustic soda are 660-745 RMB/ton, stable from previous day. A large aluminum oxide plant in the region purchased liquid caustic at 590 RMB/ton. For 50% ion-exchange membrane caustic soda, main transaction prices are 1250-1280 RMB/ton, up 10 RMB/ton from previous day. Recently, some chlor-alkali plants have experienced unstable production, reducing supply, but downstream procurement remains acceptable. The price of 32% liquid caustic soda remains stable, while 50% is affected by unstable production and reduced supply, along with export market support, leading to price increases.

In the short term, driven by geopolitical conflicts in the Middle East affecting ethylene-based PVC raw material supply in Japan, South Korea, and other countries, some petrochemical giants expect reduced production of PVC, which supports increased export expectations domestically. Additionally, with about 30% of China’s ethylene-based plants experiencing raw material shortages, supply of caustic soda from co-production is expected to contract further.

Strategy: Expect wide fluctuations; main contract SH2605 price range: 2000-3000 RMB/ton.

(Ouyang Yuke, Futures Trading License: Z0023259)

PVC:

As of March 17, the main contract PVC2605 closed up 52 RMB/ton to 5901 RMB/ton. Shandong spot to main contract basis: -181 RMB/ton (weaker by 82 RMB/ton), South China spot basis: -51 RMB/ton (weaker by 2 RMB/ton), North China spot basis: -401 RMB/ton (weaker by 52 RMB/ton).

In the short term, PVC price increases are driven by rising costs of ethylene-based units and expectations of reduced production due to raw material shortages among some overseas petrochemical giants, which enhances export prospects. However, with crude oil prices falling significantly and the current “high supply, high inventory” fundamentals, the market is slow to follow the price trend, shifting from cost-driven to supply risk-driven, leading to wide-range fluctuations.

Strategy: Wide-range fluctuation, main contract V2605 price range: 4800-6000 RMB/ton.

Crude Oil:

Overnight, international oil prices remained volatile, with Brent May futures up 2.45%. Monday, attacks on UAE gas fields and Fujarah port, as well as southern Iraqi oil fields, occurred. Iran retaliated, expanding strikes to Middle Eastern energy infrastructure. Tuesday, Iran’s hardline figure Larijani was killed; the U.S. indicated targeting Iran’s coastlines near the Strait of Hormuz. Last week, U.S. API crude inventories unexpectedly increased by 6.556 million barrels. Attention is on tonight’s EIA data. We believe Brent’s current trading range is $85-100/barrel. Passage through the Strait of Hormuz may require Western naval escort or U.S. military control, which would require more extreme oil prices. Holding out-of-the-money call options on crude oil is recommended to hedge short-term extreme high-price risks.

Operation Strategy: Hold out-of-the-money call options on crude oil.

(Fang Mingyu, Futures Trading License: Z0023613)

Fuel Oil & Low Sulfur Fuel Oil:

Yesterday, Singapore fuel oil market showed divergence: high sulfur fuel oil spot premiums and crack spreads declined, while low sulfur fuel oil premiums and crack spreads strengthened. Tightness in diesel market increased the shift to low sulfur fuel oil production. Last week, Brent at $100-120/barrel tested the tolerance of Western countries to inflation and regional energy crises. We expect oil prices to return to the $85-100 range, with high and low sulfur fuel oils mainly following crude oil fluctuations.

Operation Strategy: Observe

(Fang Mingyu, Futures Trading License: Z0023613)