02 July 2007 00:00 [Source: ICB]
Caustic soda (sodium hydroxide) is a versatile alkali that has major uses in the production of chemicals, pulp and paper, alumina, soap and detergents, and cellulosics.
Other outlets include water treatment, food, textile and metal processing, mining and glass-making, among others.
Demand in Europe was very good last year and remains healthy in 2007. But supply suffered in 2006 and was extremely tight, with stocks declining steadily through the year and hitting an all-time low of 215,278 tonnes in November, according to Euro Chlor figures.
Availability has improved slightly this year, with stocks up to 273,998 tonnes in May. But producers maintain supply is still tight as outages at chlor-alkali and chlorine-fed plants have reduced output in May and June. Some producers have placed customers on allocation or 100% order control.
INEOS is buying Kerling, Norsk Hydro's chlor-alkali and polyvinyl chloride (PVC) assets, with the purchase due to complete in the third quarter (Q3). Vestolit started commissioning its membrane cell plant in Marl, Germany, last month, which will raise capacity of caustic soda to 293, 000 tonnes/year.
European suppliers are targeting a price increase of €30-50/dry metric tonne (dmt) FD NWE for Q3, which would lift contracts to €300-310/dmt. However, buyers are questioning the size of the increase, with some predicting smaller rises of €10-15/dmt or a rollover. Spot prices for liquid caustic soda in late June stood at $300-310/dmt FOB NWE. Producers say margins improved in 2006, but have dropped this year and continue to be squeezed by high energy prices.
Nearly all caustic soda is produced by the electrolysis of sodium chloride solution (brine) using mercury, diaphragm or membrane cells. For every tonne of chlorine, 1.1 tonnes of 100% caustic soda is generated.
With mercury cells, sodium from the brine forms an amalgam, which is decanted and hydrolysed to yield sodium hydroxide. Membrane cells operate with more concentrated brine and produce a more pure and concentrated caustic liquor.
The mercury cell route is being phased out in favour of membrane technology, with most European plants expected to have converted by 2015.
Health and safety
Caustic soda is available as a solid or liquid solution. Contact with organic and inorganic chemicals may cause fire or explosions. It can be absorbed by inhalation or ingestion and is very corrosive to the eyes, skin and respiratory tract.
Europe's net supply balance will remain unchanged, despite a marginal rise in capacity from plant conversions. Demand will lag supply and sources say periods of tightness will occur more frequently.
Investment is focused in the Middle East (Iran, Saudi Arabia, Oman and Qatar) and Asia, mostly China. China continues to expand its vinyls industry, which will generate surplus caustic soda. CMAI consultancy says China will increase its exports of caustic soda to 1.4m dmt by 2011, from nearly 1m dmt in 2006.
MAjOR EUROPEAN CAUSTIC SODA CAPACITY '000 TONNES/YEAR*
|Akzo Nobel||Botlek, Netherlands||700|
|Dow Chemical||Schkopau, Germany||275|
|INEOS Chlor||Runcorn, UK||844|
|Porto Marghera, Italy||220|
|Tessenderlo Chemie||Tessenderlo, Belgium||440|
* only shows plants over 150,000 tonnes/year
Profile last published 30 May 2005
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