FocusLatin America looks to Europe for caustic

16 May 2008 21:48  [Source: ICIS news]

By Greg Holt

HOUSTON (ICIS news)--Price volatility for caustic soda caught some market participants off guard this week as Europe emerged as the primary source of exports into Latin America, sources said on Friday.

In Brazil, a large shipment of caustic soda from Romania that unloaded in the Santos port near Sao Paulo earlier this week was completed in late-April at $540/DMT CFR, sources said.

That deal was done at a bargain price, traders said, especially considering that export prices from the US Gulf were moving toward $600/DMT FOB (free on board) during the same period.

However, by this week’s end that trend had flipped on its head, and traders said deals on export shipments to Brazil from Europe were completed in the range of last week’s ICIS pricing assessment of $600-660/DMT CFR.

Severely tight supply conditions in the US and Asia-Pacific has left Europe as practically the only source for exports to Latin America, and export prices from European producers are rising quickly as a result, participants said.

“The availability of lower-priced caustic soda from Europe quickly dried up, and prices bounced back,” one trader said.

European spot prices were last assessed at $440-450/ (DMT) on a free on board (FOB) NWE (northwest Europe) basis, according to global chemical market intelligence service ICIS pricing.

However, selling ideas have been mooted much higher, up to $480-490/DMT FOB NWE, for export to the US Gulf.

This was not high enough, however, for one source.

“For any new business, $480-490 would be the very low end, but this is only a guess at the moment,” the source said.

The Americas remained an attractive destination for any surplus material in Europe, although availability has been limited, so few producers have been able to take advantage of the increasing numbers.

The Mexican and Colombian caustic soda markets also depend on imported material to meet local demand, and import prices increased dramatically this week on higher-priced material from Europe.

Imported caustic soda to Mexico jumped more than $100/DMT (dry metric tonne) (€65/DMT) this week, with deals heard done in the $620-680/DMT CFR (cost and freight) range, producers and traders said.

That was up from last week’s assessment of $520-550/DMT CFR, according to ICIS pricing.

Deals heard done on shipments from Europe to Colombia were completed at $600-660/DMT CFR, up $50/DMT from last week’s ICIS pricing assessment of $550-610/DMT CFR.

If Latin America is now depending on Europe’s limited production capacity to supply its caustic market, buyers can expect prices to move upward at a hasty pace, one trader said.

(With additional reporting by Adal Rafiq in London)

($1.00 = €0.65)

For more on caustic soda visit ICIS chemical intelligence
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By: Greg Holt
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