APLA ’08: Brazil caustic soda seen up on chlorine

17 November 2008 18:46  [Source: ICIS news]

RIO DE JANEIRO (ICIS news)--Brazil caustic soda prices will likely remain firm because of supply constraints amid softening chlorine demand, a distributor said on Monday.

Caustic soda is a co-product of chlorine, but producers base production rates on chlorine consumption because the product cannot be as easily stored as caustic soda.

According to the distributor, demand for chlorine in Brazil is softening due to a slowdown in the construction sector amid a weaker economy.

The construction sector is a major consumer of polyvinyl chlorine (PVC), of which chlorine is a major feedstock.

However, other market participants said the slowdown in the economy could also impact caustic soda demand, particularly in the key alumina and pulp and paper sectors.

Brazilian alumina and pulp and paper plants are running at reduced rates due to weak demand, sources said on the sidelines of the 28th Latin American Petrochemical Annual Meeting (APLA).

A drop in caustic soda consumption in those markets could offset a reduction in chlorine output and keep the market balanced.

Brazilian caustic soda spot prices were assessed at $850-900/tonne (€689-720/tonne) in the week ended 14 November, steady with the previous week, according to global chemical intelligence service ICIS pricing.

Prices in Brazil are twice as high as in Asia, but cheaper imports cannot fully meet demand due to lack of storage at Brazilian ports, the distributor said.

“You can get the ship but you can’t unload the product in Brazil,” the source said.

The 28th edition of APLA opened on Sunday in Rio de Janeiro. The conference ends on Tuesday.

Additional reporting by Greg Holt

For more on caustic soda visit ICIS chemicals intelligence
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By: William Lemos
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