Caixin Futures Energy and Chemical Analysis: Geopolitical Risks Dominate Oil Sector, Soda Ash and Caustic Soda Remain Short-term Bullish

⑴ In terms of crude oil, the third round of Geneva talks between the US and Iran will take place this Thursday. Trump still retains the option of taking military action, and the geopolitical crisis has not been fully resolved. As SC crude oil is closely linked to overseas markets, as well as downstream fuel oil and other petroleum-related products, the cost side is expected to fluctuate significantly. In the short term, geopolitical sentiment will dominate the market, so it is necessary to pay close attention. Overall, prices may remain volatile at high levels.⑵ Regarding fuel oil, there has been no substantial progress in the US-Iran peace talks during the holiday, and the possibility of US military intervention still exists. Domestic high-sulfur fuel oil has a high import dependency, with Iranian high-sulfur fuel oil accounting for 20% of domestic imports. If the negotiation results are not ideal, there is a possibility of military intervention. However, the outcome of the talks is highly uncertain, so it is recommended to take a low-long position and avoid chasing highs.⑶ For glass, there has been no further progress in the cold repair of production lines in Shahe during the holiday, and most mid- and downstream companies have not yet resumed work, resulting in a relatively quiet spot trading atmosphere. In the short term, the main contract price premium over spot is not high, but the "golden March and silver April" peak season expectations provide price support, so a short-term bullish outlook is appropriate.⑷ Regarding soda ash, there has been no significant change in the supply and demand pattern during the holiday, and the post-holiday market remains generally stable. Equipment shutdown and technical upgrades at Sichuan Hebang triggered a rebound in the market. However, under the backdrop of high supply, upstream plant inventories have accumulated to a high level of 1.89 million tons. Overall, short-term macro optimism may drive a brief rebound in soda ash, so a slightly positive outlook is warranted, but mid-term supply pressure remains and the upside may be limited.⑸ For caustic soda, the weekly average price of 32% caustic soda rose compared to the previous week. During the Spring Festival, inventory accumulation of liquid caustic soda in Shandong was better than expected. Coupled with poor performance of liquid chlorine, some factories raised prices. However, after the holiday, plant inventories increased compared to before, enterprise operating rates remain high, and downstream resumption of work and restocking demand have not been fully released. With warehouse receipts at high levels and prices at a premium to spot, the willingness to take delivery is weak, so pressure is expected to persist.⑹ Regarding methanol, today's spot price in Taicang fell, and the methanol market failed to continue its upward trend, with futures fluctuating and weakening. This week's data shows that both port and inland inventories have increased, and the near-term basis has weakened. High inventory levels and expectations of Iranian production resumption continue to weigh on the market, so the domestic methanol market is expected to fluctuate in the near term.