Our Caustic Soda reports are published weekly in Asia, China, Europe, Latin America and the US, giving industry participants a truly global view of market movements.
There are solid and liquid spot quotations, depending on the region, and market news including information on shipping, international trade, upstream and downstream movements, as well as production issues. This analysis and intelligence equips you with the information you need to make vital business assessments.
Updated to Q3 2020
Supply for liquid caustic soda in Asia increased in the quarter, as producers ramped up chlor-alkali operating rates on greater chlorine demand for the production of PVC, amid resurgent demand and a tightly supplied market for the resin. As the electrolysis of brine creates caustic soda and chlorine in a fixed ratio, caustic soda supply soon began to outpace demand in Asia.
While many countries in Asia have seen an ease in the coronavirus spread, the economic recovery in the region remains sluggish, affecting consumption from many downstream sectors, such as pulp and paper products, alumina, water treatment, and textiles. Faced with slowed domestic consumption, some producers in Asia turned to the export market to ease mounting inventory pressure.
European caustic soda availability fell in Q2 as demand for co-product chlorine was lower. The coronavirus pandemic reduced consumption in the construction and automobile industries, which are important downstream markets for chlorine. Eurochlor statistics showed that chloralkali utilisation rates fell to 73.7% in April, down 10% compared to the previous year, and remained at a similar level in May. Spot and contract prices trended upwards during the quarter as a result.
European caustic soda demand fell for many applications in Q2, although this was outweighed by increased stockpiling. The economic effects of the coronavirus reduced consumption in the downstream pulp and paper and chemical industries. However, consumption rose in the short term in the food and hygiene industries as consumers stockpiled material, although this tapered off towards the end of the quarter. Trends were therefore mixed and dependent on the industry involved.
Supply was adequate to ample in several countries, with the exception of Brazil where large volumes from Europe and the Middle East were imported. Import volumes from the US declined as tight availability pushed US prices up. Brazil’s alumina refiner Alunorte decreased output to 35-45% of capacity, likely through October. The refiner is a major consumer of US caustic soda.
Overall demand was sluggish despite the previous strong buying interest resulting from increased production of hygiene-related products to fight the pandemic. The declining buying interest was partly attributed to depressed economies in the region. Brazil’s demand was strong, as local producer Braskem kept its caustic soda plant down due to salt shortage, resulting from subsidence at its Maceio, Alagoas mine. It is targeting a potential restart in November with salt from Chile and other places in Brazil.
Liquid caustic soda supply increased incrementally during Q3 as operating rates recovered from the sharp cutbacks during the Q2 coronavirus-related lockdowns. But production only recovered slowly and remained at well below usual output through to the end of the quarter. US producers ended most spot sales and exports to markets in Latin America, which are usually served by US material, but instead were supplied by Europe and the Middle East.
Demand eased during Q3 as the pulp and paper industry slowed operations. The lower production rates for vehicles and aircraft also reduced demand for aluminium, therefore cutting demand for caustic soda to refine alumina from bauxite deposits. Demand for caustic soda into refineries and chemical plants also lowered on the lower economic activity. Demand for water treatment purposes and to food preparation end-uses held generally steady.
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Caustic soda, with its co-product chlorine, is produced via an electrolysis of brine, in the ratio of one part chlorine to 1.1 parts caustic soda.
Caustic soda is a white, deliquescent solid in various forms with no odour. It is very soluble in ethyl alcohol and water. It is a strong base, reacts violently with acid and is corrosive in moist air to metals like zinc, aluminium, tin and lead forming a combustible/explosive gas (hydrogen). It rapidly absorbs carbon dioxide and water from air while contact with moisture or water may generate heat.
Its main uses are in the manufacture of pulp and paper, alumina, soap and detergents, petroleum products and chemical production. Other applications include water treatment, food, textiles, metal processing, mining, glass making and others.
The production of alumina from bauxite is a major end-use application for caustic soda.
Caustic soda is a basic feedstock in the manufacture of a wide range of chemicals. It is used as an intermediate and a reactant in processes that produce solvents, plastics, synthetic fibres, bleach, adhesives, coatings, herbicides, dyes, inks and pharmaceuticals.
Other uses include the saponification or conversion of fat, tallow and vegetable oils in soap manufacture, and in the manufacture of surfactants for detergents. It is used in the petroleum and natural gas industries to remove acidic materials from hydrocarbons and off-gases. In the textile sector, it is used in the chemical processing of cotton and the dyeing of synthetic fibres.
Chlor alkali production in the US and Brazil