Producers: Asian caustic soda nears $500/t mark

06 June 2008 04:27  [Source: ICIS news]

SINGAPORE (ICIS news) -- Asian liquid caustic soda cargoes for July lifting could breach the $500/ tonne FOB (free on board) northeast (NE) Asia mark in July due to strong demand from the US, producers said this week.

 

According to a NE Asian producer, he has already received, from a US buyer a bid of $510/tonne FOB NE Asia for a 3,000 tonne cargo for July lifting.

 

Offers for July lifting were heard at around $530/tonne FOB NE Asia while offers for June lifting were meanwhile at $500/tonne FOB NE Asia, other sellers said.

 

“Domestic demand [in Asia] is actually quite stable but buying interest from the US is really strong now and it’s driving prices up,” the producer said.

 

Some traders however highlighted that, negotiations for July cargoes were still ongoing and that it remains to be seen if the $510/tonne FOB NE Asia bid-- while indicative of current bullish sentiments-- is representative of the market as a whole.

 

Buyers and sellers also noted that prices for June cargoes remained at around the mid-$400s/tonne level and that trading was subdued this week. Deals done last week were at $450-460/tonne FOB NE Asia.

 

The sluggish US housing market depressed by the sub-prime crisis is one of the main factors for the strong US demand for caustic soda, industry sources said. A weak construction sector has reduced demand for chlorine derivatives particularly polyvinyl chloride (PVC), a widely used construction material.

 

Since chlorine and caustic soda are produced in the same manufacturing process, the poor demand for chlorine in the US has effectively limited the production rate of domestic chlor-alkali plants - which fell to around 80% in April.

By: Hun Wei Ng
+65 6780 4359

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