production capacity peak, raw material supply interruption, carbon emission red line, who can win in the transformation?

1, Overcapacity intensifies: caustic soda and soda ash encounter supply peaks
Caustic soda: The total domestic production capacity will reach 51.51 million tons by 2025. The plan is to add 4.77 million tons of production capacity in 2026. Even if partially postponed, the actual increase during the year will still reach 1.28-1.54 million tons, corresponding to a production capacity growth rate of 2.5% -3%. The output is expected to exceed 45 million tons (+5% year-on-year). But as of early March 2026, the factory's inventory reached 550000 tons, a historical high in nearly 5 years.
Soda ash: New production capacity of 4.1 million tons (+10%) by 2025. In the first quarter of 2026, 3.7 million tons/year of new facilities will be put into operation, with a total production capacity of 44.6 million tons/year. The compound annual growth rate of production capacity from 2023 to 2026 will reach 8.2%. On the demand side, cold repair of flat glass is concentrated, and the utilization rate of photovoltaic glass production capacity has dropped to 66.31%. The available inventory days are 30-40 days. The total demand is difficult to increase, and some companies have already incurred losses but have been slow to clear.
2, The impact of sulfur 'supply interruption': the sulfuric acid industry chain is facing double pressure
On the cost side: The Middle East supplies about one-third of the world's sulfur, and the blockage of the Strait of Hormuz has caused transportation to almost come to a halt. In April 2026, the average domestic sulfur price was 6400 yuan/ton, with a month on month increase of 34% and a year-on-year increase of 178%. The cost of sulfuric acid has sharply increased.
Policy side: Starting from May 2026, China will completely suspend the export of ordinary sulfuric acid (only electronic grade can be released), which is expected to continue until the end of the year. In 2024, China's total sulfuric acid production capacity is 141 million tons, of which about 42.5% is sulfur based sulfuric acid. The combination of supply cuts and export bans has forced companies to lay out electronic grade sulfuric acid.
3, Titanium dioxide: leading global production capacity, high-end barriers waiting to be broken
China's titanium dioxide production capacity accounts for 56% of the global total (approximately 1.5 million tons/year), with a production capacity of approximately 4.72 million tons by 2025. But the EU's anti-dumping duty is as high as 39.7%, which increases the cost of exports to Europe by about 18% and hinders the export volume by about 15%.
The environmental protection incident in Panzhihua in 2026 resulted in an average monthly production reduction of about 30000 tons. Coupled with the cost transmission of sulfur → sulfuric acid → titanium dioxide, it is expected that the annual output will be about 4.99 million tons, with a slower growth rate. In terms of technical structure, sulfuric acid method is still the main method, and the proportion of chlorination method is relatively low - the latter has a short process, low energy consumption, and high quality, which is the core breakthrough for China to move from a "production capacity country" to a "quality power".
4, Three major directions for high-end transformation
Direction 1: Leap towards electronic grade and high-end specialty chemicals. Electronic grade sulfuric acid (Hanzhong Zinc Industry, etc.) achieves import substitution; Titanium dioxide is extending towards high weather resistance and new energy battery separator coating materials, with an expected demand of 150000 tons in this field by 2028.
Direction 2: Expand towards new energy materials. The production of lithium carbonate is growing rapidly (+51% year-on-year in January 2026), and its demand for soda ash has become one of the few incremental highlights.
Direction three: Reshaping competitive barriers with green and low-carbon initiatives. The first target set in the 2026 government work report is to reduce carbon intensity by 3.8%, with a cumulative reduction of 17% in carbon emissions during the 15th Five Year Plan period. In 2027, the chemical industry will be included in the national carbon market, and the clearance of high carbon emissions and outdated production capacity will accelerate. The concentration and discourse power of top enterprises will continue to increase.
5, List of Core Highlights
Increased overcapacity: In 2026, the caustic soda production plan plans to add 4.77 million tons, and the soda ash production capacity will rise to 44.6 million tons per year, with inventory at a nearly 5-year high
The impact of sulfur "supply interruption": sulfur prices surged by 178% year-on-year, sulfuric acid exports were suspended, and supply chain security was re examined
Titanium dioxide leads the world: production capacity accounts for 56% of the world's total, but EU anti-dumping duties of 39.7% hinder exports of about 15%
High end breakthrough: Electronic grade sulfuric acid, chloride titanium dioxide, and new energy materials are the three major breakthroughs
Reshaping the pattern of carbon emissions: Chemical industry will be included in the national carbon market by 2027, and supply side constraints will accelerate the increase in industry concentration.