US caustic soda prices likely to fall, sources say

27 January 2012 21:05  [Source: ICIS news]

HOUSTON (ICIS)--US caustic soda export prices are likely to fall in coming weeks as demand from end-use sectors begins to drop, sources said on Friday.

Tightness in the market that had persisted since late in the fourth quarter of 2011 seemed to be easing, sources said, which likely would put pressure on prices to drop. There was no indication on how much such a drop might be.

Increase operating rates have contributed to the potential price reduction.

The Chlorine Institute, a trade organisation, reported on Tuesday that the US chlor-alkali production rate for December was 81%, up from 77% in November. The institute said the December output was 932,201 short tons (845,879 tonnes) of chlorine and 729,151 tons of caustic soda.

Several market players said they were not surprised by the uptick, as producers seemed to have rebuilt inventories in December after some destocking earlier in the fourth quarter of 2011.

A major buyer said the increased production would give consumers some “ammunition” to push back on proposed price increases announced for Janaury which the buyer said had failed to take hold. The annoucements, made in late November and early December, ranged between $45 and $80/dst.

Other buyers cited dampening demand in the alumina and pulp and paper sectors in the face of continuing uncertainty over the US and global economies.

However, a major producer said earlier in the week that it expected an increase in demand for caustic soda as the water treatment season begins.

US caustic soda export prices are at $450-470/dry metric tonnes (dmt) (€338-357) FOB (free on board) USG (US Gulf), as assessed by ICIS.

Caustic soda is a co-product of chlorine that has a variety of industrial end-uses, including the treatment of pulp and paper, alumina and wastewater.

Major US caustic soda prices include Dow Chemical, Formosa Plastics, Georgia Gulf, Shintech, Occidental Chemical (OxyChem), Olin, PPG Industries and Westlake.

($1 = €0.76)

For more on caustic soda, visit ICIS chemical intelligence
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