China’s caustic soda export prices rise by 15% on tight supply

01 December 2011 08:46  [Source: ICIS news]

SINGAPORE (ICIS)--China’s export prices of caustic soda were assessed as 15% firmer this week to $450-465/dry metric tonne (dmt) (€333-344/dmt) from early November because of tight supply and high demand, traders said on Thursday.

Some chlor-alkali factories have lowered the output at their units to produce less chlorine because of soft domestic chlorine demand.

The supply of caustic soda is tight because of lower production output as a result of an explosion that occurred at Japanese producer Tosoh Corp’s 550,000 tonne/year No. 2 vinyl chloride monomer (VCM) unit in Nanyo.

The company’s remaining VCM units at the same site, namely a 250,000 tonne/year No. 1 line and a 400,000 tonne/year No. 3 line, remain shut. The accident has led to increased buying interest for Chinese caustic soda cargoes by some local traders, a domestic supplier said.

VCM is a downstream of chlorine, which is produced along with caustic soda at chlor-alkali units.

China’s caustic soda producers are planning to raise their prices because of the inadequate supply and soft chlorine prices, a US-based trader said.

The export offers of 48% ion-exchange membrane, which is a type of caustic soda, were heard at above $470/tonne FOB (free on board) CMP (China Main Port) this week, according to manufacturers.

Deals were heard done at $450-465/tonne FOB CMP this week, with prices at the high end the range reflecting shipments for February 2012.

Tosoh Corp will be unable to maintain the production at its chlor-alkali units in the next 3-6 months, an international trader said. The producer is currently running its chlor-alkali units at 20% capacity, the trader added.

This is because Tosoh Corp will need to conduct a comprehensive safety inspection at all the units that the company shut as a result of the explosion, which will in turn increase the export prices of caustic soda, according to the trader.

($1 = €0.74)

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By: Sikee Shi

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