27 April 2011 16:33 [Source: ICIS news]
LONDON (ICIS)--Caustic soda demand in Nigeria has plummeted because of civil unrest in the northern part of the country, sources said on Wednesday.
Inactivity in Nigeria has prevented spot price increases across western Africa, despite global supply shortages. Nigeria is the dominant caustic soda player in western Africa, which is a net importer.
Solid spot prices have been stable at $600-670/tonne (€408-456/tonne) CFR (cost and freight) Nigeria since 31 March.
Violent clashes broke out in northern Nigeria following the 16 April presidential election. Nigerian President Goodluck Jonathan has said that he will impose a state of emergency in the northern states of Kaduna and Bauchi if statewide elections cannot be held there this week.
Nigerian buyers are holding off purchases until the political situation stabilises, and the resultant drop in consumption has counterbalanced the fall in import volumes.
“There’s not much activity because of the election unrest, everything is disrupted,” a local buyer said.
Supply shortages in Asia and Europe, which are western Africa’s major trading partners, have limited imports.
There have been severe caustic soda shortages across Asia following the 11 March earthquake in Japan. Around 2m tonnes of caustic soda per year are exported from Japan, which is a major supplier for Asia, Australia, and the US.
Coupled with this, Japan manufacturers an estimated 80,000 tonnes/year of alumina for export. The shortfalls are in part being met by production in the rest of Asia, meaning that caustic soda is being fully utilised domestically and is not available for export to Africa.
Asian liquid spot caustic has increased by almost 50% since the begining of 2011. Chinese solid caustic soda prices have increased by 14% in the past month. Both of these increases are the result of tight supply.
A heavy second-quarter maintenance schedule in Europe means that many producers in the region are stockpiling material ahead of turnarounds, limiting export availability.
“There are some [supply] problems in Europe, so we’re concentrating all sales in Europe and not exporting. Europe is very tight,” a producer said.
($1 = €0.68)
Additional reporting by Feliana Widjaja
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