AFPM '12: US Gulf caustic soda gap to widen - alumina producer

02 April 2012 01:05  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--The differential in the US Gulf caustic soda market between distributors and the lower-priced alumina segment should widen in coming months as supply lengthens, a European alumina producer predicted on Sunday.

Alumina producers are major consumers of caustic soda, and they are hoping that the emerging northern hemisphere construction activity - now picking up from a seasonal winter lull - will lift demand for polyvinyl chloride (PVC).

Increased output of chlorine as a feedstock for that product will in turn boost the supply of caustic soda, which is produced in a 1:1 ratio with chlorine.

While that should put downward pressure on caustic soda prices in general, it would in particular prompt relatively lower offers from US Gulf producers to overseas buyers in the alumina segment, the European source said.

As well as recognising the larger quantities that alumina segment buyers take, caustic soda sellers are willing to lower their offers to them - relative to distributors - as a means of balancing supply and demand in the domestic US market, the source said.

Alumina segment buyers are currently paying around $380/DMT (dry metric tonne) (€285/DMT) for FOB (free on board) US Gulf material, the source said.

That compares with a range of $420-445/DMT currently assessed for barge-sized parcels, which are representative of the distributor market.

The gap has been as wide as $100 or more in previous years.

($1 = €0.75)

By: Stephen Burns
+1 713 525 2653

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