China’s downturn slows caustic soda markets

US NaOH Apr12.pngAs promised yesterday, the blog is running a special series of posts this week focused on chloralkali and PVC markets.

Caustic soda is a key indicator for the global economy. This is because it is used in a wide variety of basic industries, including mining, pulp and paper, detergents and water treatment.

The USA is the largest producer, and the chart above shows the evolution of its net export position between 2009-11, based on GTIS data (Global Trade Information Services):

• Volumes soared in 2010 (blue column) versus 2009 (purple)
• The key was increased exports to the major mining countries such as Brazil, Jamaica and Australia, plus lower imports from NEA
• Overall, net exports rose 72% in 2009-11 from 1.5MT to 2.7MT.
• Net exports to Brazil rose 37% from 1.4MT to 1.9MT

The driver for the increase was China’s massive stimulus programme. This was focused on infrastructure investment, and led to major increases in its metal imports from Brazil and other mining-based economies.

However, as the chart also shows, growth rates reduced in 2011 (orange column). Overall, US net exports were up only 12% versus the previous year. 2012 US trade data to the end of February confirms this trend. Export vloume of 690KT showed no overall growth versus 2011 levels.

Caustic markets are thus confirming China’s slowdown is continuing.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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