Morning Insight: July 8, 2026

Morning Insight:July 8, 2026 LinlinGaoCertification：Z0002332gaolinlin@gtht.comYu Chen Wu (Contact)Certification：F03133175 wuyuchen@gtht.com Main Body Live Hogs:Expectations have been largely priced in, with the marketawaiting fresh data catalysts. Volatility in the spot market has increased recently. A widening premiumof heavy hogs over standard-weight hogs has encouraged both delayedmarketing and secondary fattening, driving a sharp rebound in standard-weight hog prices and leading to a rapid narrowing of the Septemberfutures premium over spot prices. Following this rally, the market has increasingly priced in the view thatcapacity liquidation may come to an end. As a result, commercial hedgershave actively entered the market, weighing on futures prices andintensifying the tug-of-war in nearby contracts. At this stage, it may beprudent to wait for clearer confirmation from spot market fundamentalsbefore initiating new positions. Overall, current futures prices appear to have largely incorporated theseexpectations. Deferred contracts have retreated to valuation levels seenbefore the market began trading the production-capacity liquidationnarrative. Once commercial hedging activity has been fully absorbed,market pricing is expected to shift back toward underlying fundamentals,with production-capacity data once again becoming the primary driver ofvaluations. Chemicals:Valuations are poised for a recovery as downstream restockinggains momentum. Prices across the chemical complex have fallen back to levels close to their pre-conflict historical lows. Following the reopening of theStrait, the release of floating inventories has largely eliminated thenear-term geopolitical risk premium embedded in most chemical products.However, actual supply recovery has been more gradual than pricessuggest. Imports of chemical products are expected to remain athistorically low levels throughout July, with a more meaningful recoverylikely beginning in August. At the same time, domestic supply losses areprojected to increase further in July due to scheduled maintenance, whilea large number of production units are expected to restart in August.From a timing perspective, supply is likely to recover in August, butthis will coincide with the arrival of the seasonal demand peak. As aresult, inventories may not immediately begin to build despite highersupply, as both supply and demand are expectedto increasesimultaneously. Meanwhile, most chemical products remain characterized by low inventoriesand strong spot premiums (basis). Given the significant passivedestocking that has taken place across the industry over the past fourmonths, replenishment is expected to acceleratethroughout the supplychain. With the outlook for U.S.–Iran negotiations still uncertain,current price levels—near historical lows—provide strong incentives fordownstream consumers to rebuild inventories. As a leading indicator of the restocking cycle, the recent strength innaphtha suggests that, while overall supply flows remain below pre-conflict levels, any concentrated downstream restocking is likely to pushfeedstock prices higher, squeezing downstream margins. In the short term,pricing may ultimately be constrained by downstream profitability. Basedon current inventory-to-sales ratios in both the aromatics and olefinschains, this dynamic could become a common theme across the sector.Overall, the chemical complex appears well positioned for a valuationrecovery. Soda Ash:Near-term outlook remains weak, but caution is warranted when chasing the downside. The fundamental driver behind the current bearish outlook is thecombination of oversupply and weak demand. China's soda ash market hasremained subdued, with prices fluctuating near the bottom of the recentrange. A small number of producers have increased operating rates,resulting in a modest rise in overall supply. Downstream demand remainslackluster, with purchases largely made on a hand-to-mouth basis.Meanwhile, weaker futures prices have stimulated some buying interest atlower price levels. Looking ahead, scheduled maintenance is expected to increase around themiddle of the month, which should lead to a decline in supply. Atpresent, the market's main sources of support are producers' willingnessto defend prices and a modestly supportive spot-futures basis. Valuation also provides some support. Current futures prices have fallenclose to the delivered cost of production from the industry's lowest-costproducers to designated delivery warehouses, suggesting limited room forfurther downside from a cost perspective. That said, the bearish argument remains that valuation is secondary tofundamentals. As long as the market continues to face structuraloversupply and weak demand, cost support alone is unlikely to reverse theprevailing downtrend. Open Interest Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJ