Corrected: AFPM '14: US liquid caustic soda market awaits coming new capacity

29 March 2014 23:11 Source:ICIS News

Correction: In the ICIS story headlined “AFPM '14: Tight US labour to cause delays, overruns − CP Chem CEO” dated 29 March 2014, the incorrect state was given for OxyChem's plant. Please read in the seventh paragraph … capacity expansion in New Johnsville, Tennessee … instead of … New Johnsville, Kentucky … A corrected story follows.

HOUSTON (ICIS)--The US liquid caustic soda market is looking at March price increases and more in April as the market awaits the arrival of as much as 1.4m dry short tons (dst) of new capacity to come online.

The shifting market dynamics are likely to be a topic of discussion at the annual International Petrochemical Conference sponsored by the American Fuel & Petrochemical Manufacturers in San Antonio, which starts on Sunday.

New production facilities by a Dow Chemical-Mitsui joint venture and Westlake Chemical are nearing the completion of their start-up modes, and new production from OxyChem is now in the early start-up phase.

The Dow-Mitsui  partnership is expected to bring an estimated 880,000/dst of new membrane capacity to the market at Dow’s complex in Freeport, Texas. Dow has said it will shut down a similar amount of diaphragm capacity as the new product comes to the market.

Westlake’s expansion will add 385,000 dst/year at its Geismar, Louisiana, complex.

Both have been scheduled to ramp up to commercial operating rates by the end of the first quarter.

In addition, OxyChem has initiated startup of its capacity expansion in New Johnsville, Tennessee, which will add 182,500 tons of chlorine and 200,000 dst/year of membrane-grade material.

Even if there is no overlap in Dow’s new and old production, there will be an estimated 550,000/dst of new capacity in the market near the end of the second quarter.

The tumultuous change in market views and production dynamics had many participants trying to gauge current supply and in search of a price direction going forward.

Some distributors say that the first phase of the new production has already been priced in the market.

“Demand has really taken off,” a producer said, adding that a bullish market is helping producers hold prices at least level for the first quarter.

But the market has taken the first part of what appears to be a two-pronged price increase across March and April by most producers. After failed attempts to raise prices in the fourth quarter and on January, producers issued temporary value allowances. They have been revoked as producers sought $40-50/dst increases for March.

About half of that may have taken in March, and producers are bullish that they will get the $40/dst increase when negotiations are completed across the two months.

Meanwhile, spot barge and export prices have begun to edge up, slowly in early March and perhaps slightly faster in the last half of the month.

Buyers generally agree that demand is meeting their forecasts, although severe winter weather conditions have pushed the construction season forward and suppressed some demand.

Meanwhile, US exports of liquid caustic soda are rising.

US January liquid caustic soda exports of 373,871 tonnes were up 14% over January 2013, according to the most recent figures from the US International Trade Commission (ITC).

Exports to the US’s biggest consumer, Brazil, were up 6% in January to 176,773 tonnes.

For all of 2013, totalled 4.52m tonnes, up 8% above 2012.

Meawhile, imported product from Saudi Arabia are making their way to the US East Coast, from Samapco, in Jubail. The new facility there was built to supply a planned adjacent Alcoa facility that won’t be ready for production until perhaps the third quarter. The new supply alternative has given buyers a new alternative and tended to help blunt domestic price increases.

Major US caustic soda producers include Axiall, Dow, Formosa Plastics, Westlake, Olin and OxyChem.

 

By Bill Bowen