FocusEurope caustic stocks down ahead of Q2

20 March 2008 14:44  [Source: ICIS news]

By Adal Rafiq

 

LONDON (ICIS news)--February caustic soda stocks across Europe fell 9.0% on January, adding further tightness to thje market, industry association Eurochlor said on Thursday.

 

Inventory levels totaled 249,775 tonnes at the end of February, down from January’s figure of 274,625 tonnes, according to the Eurochlor announcement.

 

“This was what we feared was coming and it has come - nobody can quibble about this, it is jolly tight and we are in a take it or leave it situation,” said one seller source.

 

Output of co-produced chlorine also decreased 0.8% from the previous month in terms of average daily production despite a 0.6% increase with the same month in 2007.

 

“There have only been around four other occasions since I have been doing this, when stocks were this low,” the source added.

 

European buyers acknowledged the increasingly tight conditions, but were careful to note that contract business was on the whole intact. It was the spot market, they added, which had been severely dented by the prolonged squeeze on product.

 

In fact, the results were very much in line with expectations from most players in the caustic soda market and widely seen as a good indicator of the ongoing tightness currently witnessed on both sides of the Atlantic.

 

“The sinister thing for us is that this comes when the US is in big supply trouble. They are chronically short.”

 

Prices from European producers to the US east coast have been significantly more attractive than domestic business following the force majeure declaration at major producer Olin.

 

However, despite the widely mooted US tightness, a large volume was heard to be arriving at the end of March, although no further details were available.

 

Most sellers in Europe said they were in no position to take advantage of the increasingly attractive export opportunities across the Atlantic.

 

In Europe, meanwhile, negotiations for second-quarter domestic contracts were still in their early stages.

 

Following recent announcements from a northwest European major of plus €45/tonne ($70/tonne), a second major producer said it would be targeting plus €50/tonne from 1 April.

 

Spot prices were last assessed at $390-410/DMT (dry metric tonne) on a FOB (free on board) NWE (northwest Europe) basis according to global chemical market intelligence service ICIS pricing. The numbers were largely notional in the absence of actual deals.

 

Similarly in the Mediterranean, prices were assessed at $390-400/DMT FOB.

 

“I am certainly looking forward to Easter,” one source ended.

 

EU 25 + Norway/Switzerland: production and capacity utilisation

	Production (tonnes)			Capacity utilisation (%)
	2007	2008	% change	2007	2008 (estimate)
January	923,012	916,897	-0.7	87.5	85.7
February	845,299	850,525	+0.6	88.8	85.0

Caustic soda stocks (tonnes)

	2007	2008
January	299,778	274,625
February	297,068	249,775

For more on caustic soda and chlorine visit ICIS chemical intelligence

By: Adal Rafiq
+44 20 8652 3214

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