Corrected: Caustic soda prices fall as aluminium output is cut

14 March 2013 17:38  [Source: ICIS news]

Correction: In the ICIS story headlined "Caustic soda prices fall as aluminium output is cut" dated 14 March 2013, please read in the sixth paragraph's largest aluminium producer ...instead of... world's largest alumina producer.... A corrected story follows.

LONDON (ICIS)--Falling demand from the alumina sector has forced down caustic soda prices in Asia and the Middle East, a caustic soda buyer said on Thursday.

The buyer said that second-quarter caustic soda prices for the alumina industry (alumina contract) have settled in Asia at $300/dmt free on board (FOB) Asia.

A large proportion of Middle Eastern and Asian caustic soda is consumed by the Australian alumina industry. The alumina sector is the largest caustic soda consumer globally, hence its price tends to be lower than ordinary contract prices for other end-uses, a trader said. 

Alumina is used in aluminium production, which is in turn used in the construction and automotive industries for light-weight applications. To produce one tonne of alumina, about 100kg of caustic soda is used. In turn, to produce one tonne of aluminium, two tonnes of alumina are used.

The drop in caustic soda prices is a result of poor demand from the alumina industry, sources said.

As a result of falling demand from the construction and automotive industries, RUSAL, the world's largest aluminium producer, announced it would reduce its aluminium output by 300,000 tonnes by the end of 2013, according to a company statement. 

The decision has been made because of global overcapacity, high power tariffs and a drop in metal prices.

According to the London Metal Exchange (LME), the price of aluminium for cash buyers has gone from about $2,300/tonne in February 2012 to about $1,900/tonne in March 2013.

"The oversupply crisis, which came to the industry following the global 2008-2009 downturn and Eurozone recession, was never completely addressed. Therefore, RUSAL considers it necessary to correct its capacity optimisation plans announced before and cut the annual production of primary aluminium by 300,000 tonnes as early as in 2013," RUSAL CEO Oleg Deripaska said earlier this month.

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By: Janos Gal
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