25 June 2008 10:42 [Source: ICIS news]
SINGAPORE (ICIS news)--The current globally snug supply situation for caustic soda could be reversed if chlorine growth continues to outpace caustic soda, said Janet Wright, business manager from consultancy Tecnon Orbichem, on Wednesday.
“While it is difficult to imagine caustic soda going long, it will do so eventually because chlorine is growing faster than caustic soda,” she said, elaborating on two possible scenarios.
“The industry will need to deal with this growing surplus [of caustic soda]. A correction would then take place, first led by chlorine prices going up which might eventually translate into lower chlorine demand,” said Wright, adding that this would in turn ease the caustic soda surplus as operating rates are reduced.
Some producers might also use alternative chlorine technology [hydrochloric acid-to-chlorine] which might help to ease the balances in the longer term, she added.
When caustic soda supplies rise, the market might increase consumption due to lower prices.
Increased usage from alumina producers, using a poorer quality bauxite, might translate into more caustic soda use. Also, some soda ash consumers might make the switch to caustic soda use if supplies were readily available.
“Some players have the option to make caustic soda into soda ash and vice-versa but there are few players with this capability in reality. Although in today’s market, some would have really liked to have had this capability,” she said.
“But today even if they had the technology, they could not do this because soda ash is tight too,” she added.
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