08 December 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--Asian caustic soda exports to southern Africa have halved since October because of price increases in Asia and strong competition from the Middle East, sources said on Thursday.
"We normally export around 40 containers per month to [southern] Africa, but this has been cut to 20 containers since October," said a southeast Asian exporter.
One container contains 22.4 tonnes of solid caustic soda.
Both liquid and solid caustic soda prices have continued to increase in Asia because of tight supply and production problems.
Weak polyvinyl chloride (PVC) demand and low consumption rates have led to chlor-alkali production rates being cut back. PVC is the major downstream market for caustic soda’s co-product, chlorine, so a reduction in PVC production generally means lower caustic soda output.
The supply tightness has been exacerbated by an explosion at Tosoh’s No 2 vinyl chloride monomer (VCM) line in Nanyo, Yamaguchi prefecture, Japan. As a result, Tosoh’s caustic soda plant at Nanyo has been operating at around 20% capacity or lower. Tosoh plans to increase it to around 30% in the first half of December, said a source close to the company.
The majority of caustic soda volumes from northeast Asia were heard to have been shipped to Japan and Australia, while limited volumes are going to southeast Asia as some buyers are still adopting a wait-and-see approach.
In South Africa, the price of caustic soda imports have steadily increased in recent weeks in local currency terms because of the continued weakening of the South African rand against the US dollar.
"Importing material has become costly in recent months because the rand has lost a lot of its value against the [US] dollar, which has made imports more expensive in local currency terms," said a South African buyer.
As a result of increasing Asian prices, most southern African buyers have turned to Middle Eastern exporters that offer competitively priced material, lower freight costs and shorter lead times.
One southern African importer said the price difference between the two regions is around $20–25/tonne (€15–19/tonne) for solid and $20–25/dmt for liquid caustic soda.
Middle Eastern exporters said they expected Asian competition to gradually decline because it has become too costly for southern African buyers to import from Asia.
"I believe that at least 80–90% of southern African imports are now sourced from the Middle East," said a Middle Eastern exporter.
Southern African prices for solid caustic soda are at $600–640/tonne CFR (cost and freight) Durban, while liquid caustic soda is at $520–550/dmt CFR Durban. The high end mainly represents imports from Asia, while the low end represents the Middle East.
The major end market for caustic soda in Africa is pulp and paper. Other important end-uses include alumina manufacture and soaps and detergents.
($1 = €0.75)
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