Europe caustic soda FOB spot prices fall as availability improves

14 January 2011 12:17  [Source: ICIS news]

LONDON (ICIS news)--European caustic soda spot free on board (FOB) export prices saw their first decline in nine weeks as improving availability and limited export opportunities began to weigh on sentiment, sources said on Friday.

Northwest European (NWE) FOB prices fell by $40/dmt (€30/dry metric tonne) as values slipped below the $400/dmt mark to trade at $360-400/dmt. Meanwhile, prices in the Mediterranean were slightly firmer at $380-400/dmt FOB MED, according to ICIS.

The reductions were largely attributed to improving availability of product, as production constraints within the region had been resolved, or were nearing resolution, in the past weeks.

Limited export opportunities, particularly in the US east coast, and the Christmas and New Year break had given producers some chance to rebuild inventories, several sources said.

Exerting further pressure on the market was also the recent start up of the Ukrainian ZAO Karpatneftekhim chlor-alkali facility in Kalush – a subsidiary of Lukoil-Neftekhim – which was beginning to place more volume into Turkey and the Black Sea region.

“The market is definitely more balanced now. In the fourth quarter it was difficult to find spot material and prices were certainly above $400/dmt FOB, but the situation is improving now,” a large buyer commented.

The source added: “In the past week I have received three phone calls offering me additional spot quantities which I did not take as I have no need for the material. Sellers are obviously looking to get rid of product and are prepared to be more flexible on their FOB pricing as they want to try and keep their inland prices [free delivered quarterly and monthly contracts].”

This was echoed by a second spot consumer, who conceded that: “Producers and traders can still achieve prices of $400/dmt in the Mediterranean and possibly in Scandinavia, but this will not be the case in two or three weeks time.”

However, prices remained high in the Black Sea and Turkish markets, where material was short. Two deals were concluded between $400-430/dmt FOB.

While a number of traders and manufacturers confirmed the lower prices in northwest Europe and the Mediterranean, the majority of producers canvassed continued to report that they had limited stocks and therefore had little to no availability to offer onto the FOB market.

One major producer noted: “Demand will pick up swiftly in the next few weeks [after the Christmas holidays] and caustic soda stocks are still below comfortable levels – there is still tension in the market.”

The source concluded: “Spot prices are sensitive – they could just as easily spike again the next couple of weeks.” 

($1 = €0.75)

For more on ZAO Karpatneftekhim’s Kalush plant, visit ICIS plants and projects
For more on caustic soda, visit ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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