09 May 2013 16:17 [Source: ICIS news]
LONDON (ICIS)--Eastern African solid caustic soda prices have declined by $150-155/tonne (€114-118/tonne) since May 2012 because of low-priced Chinese and Indian-origin imports, sources said on Thursday.
Global demand for caustic soda from the key downstream alumina industry has declined dramatically during the past year, driven by capacity cuts and weak aluminium demand, resulting in sharp caustic soda price drops.
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. When demand from the alumina industry drops, caustic soda prices tend to decline.
Solid caustic soda prices in eastern Africa fell from $670-690/tonne CFR Kenya in May 2012 to $520-535/tonne CFR Kenya in May 2013.
The drop was mainly driven by cheap Chinese and Indian imports.
One Indian seller said that this week it heard of a 400-tonne cargo which was sold at $420/tonne FOB Tianjin by one trader. This shipment is expected to arrive in eastern Africa in about six to seven weeks. This is said to be a one-off, cut-price deal as most trades have been at $440-460/tonne FOB China in recent weeks.
According to a trader, Indian-origin solid caustic soda is at $520-530/tonne CFR Mombasa or CFR Dar es Salaam, while Chinese-origin is about $5-10/tonne below that level. Some sellers that are desperate to offload stocks can go even lower than the $520/tonne CFR Kenya mark, but this would be an extreme, the trader added.
($1 = €0.76)
Follow Janos Gal on Twitter @janosgalICIS
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