US caustic soda prices should rise $10-30/dst - Olin CEO

26 April 2013 17:20  [Source: ICIS news]

HOUSTON (ICIS)--US-based chlor-alkali producer Olin expects caustic soda prices to increase between $10-$30/dry short ton (dst) (€7.7-23.1/dst) in the second quarter, despite what CEO Joseph Rupp characterised on Friday as “erratic demand”.

During the first quarter of 2013, all of the major US chlor-alkali producers, including Olin, announced price initiatives ranging from $30-$50/dst, which were to be effective on 1 March. Producers cited continuing tightness in supply, planned and unplanned outages in late 2012 and early 2013, as well as steady demand across most consumer segments for the proposed price hikes.

Since then, many buyers have balked at the price initiatives, but producers have been steadfast in backing them, according to market sources.

March contract prices for US caustic soda are assessed by ICIS at $515-585/dst.

In a Q1 earnings call on Friday, Rupp told analysts he expects the partial implementation of the Olin increase to go through. A concurrent increase for co-product chlorine, which did not receive full backing from US producers, will have more trouble being implemented, Rupp said, although the company continues to push it.

Rupp and John McIntosh, senior vice president of operations, said US chlor-alkali demand was very erratic in the first quarter and that is continuing in the second quarter. That bumpiness in demand has been across the country and month-to-month, with no definite pattern, the officials said. That has made it hard for Olin to maximize its production decisions, Rupp said.

Rupp said Olin is meanwhile benefitting from the conversion and configuration of its chlor-alkali facility in Charleston, Tennessee, from membrane to mercury cell technology, as well as lower electricity costs. Those lower electricity costs are based on decreased natural gas prices brought on by the shale gas phenomenon, as well as lower coal costs as producers try to compete with natural gas.

($1 = €0.77)

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By: Ken Fountain

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