Southern African liquid caustic soda prices drop on poor demand

16 May 2013 16:43  [Source: ICIS news]

LONDON (ICIS)--Southern African liquid caustic soda prices could fall to $400/dmt (€312/tonne) cost and freight (CFR) Durban by July because of poor caustic soda demand globally, caused by a downturn in alumina consumption, sources said on Thursday. 

According to ICIS data, liquid caustic soda prices in southern Africa dropped by $10/dmt to $430-450/dmt CFR Durban on 16 May because of cheaper imports. Southern Africa is a net importer of caustic soda.

Major pulp and paper producers in southern Africa expect that they will have to pay around $400/dmt CFR Durban for July delivery, taking advantage of lengthy supply in Asia and poor alumina demand in Australia. 

The alumina industry is the largest consumer of caustic soda. Alumina is used in aluminium production, which is in turn used in the construction and automotive industries for lightweight 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. 

Alumina demand slumped in recent months and, as a result, alumina producers such as US-based Alcoa and Russian major Rusal have cut back production. This has resulted in lower caustic soda consumption globally, driving prices down. 

Prices in southern Africa began to fall in April and this trend is not expected to stop until July, when prices could bottom out at $400/dmt CFR Durban. 

($1 = €0.78) 

Follow Janos Gal on Twitter @janosgalICIS

By: Janos Gal
+44 208 652 3214

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