11 March 2009 20:51 [Source: ICIS news]
HOUSTON (ICIS news)--US caustic soda contract prices fell for the first time in two years on weak demand and Asian arbitrage, buyers and sellers said on Wednesday.
February caustic soda contracts settled $200/dst (dry short tonne) or €143/dmt (dry metric tonne) lower to $875-950/dst FOB (free on board), industry participants said.
Contract prices held at a record average price of $1,110/dst from August 2008 - January, according to global chemical market intelligence service ICIS pricing.
Yet sources said the economic downturn and a collapse of commodity markets greatly reduced industrial consumption of caustic soda over the last several months.
Prices dropped earlier in Asia, and as producers there aggressively sought out arbitrage opportunities in the Americas, US spot prices fell from the high-$900s/dmt in November to current levels the low-$700s/dmt, producers and traders said.
That emboldened US caustic soda buyers - who had accepted steep price hikes during a supply crunch that lasted for most of 2008 - to push for a significant price drop during February contract negotiations, participants said.
“I’m looking for prices to drop just as quickly as they rose last year,” one buyer said.
US caustic soda producers have slashed production rates as consumption in the alumina and pulp-and-paper sectors drops off and buy supply continues to outstrip demand, one producer said.
As a result, further losses are expected for US spot prices over the next few weeks, and that will weigh heavily on March contract negotiations, the producer said.
US caustic soda producers include Georgia Gulf, Formosa Plastics, Olin, PPG Industries, Bayer, Dow Chemical, Occidental Chemical and Shintech.
($1 = €0.79)
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