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 Q1 2021
Save for a few unscheduled turnarounds in Asia, supply in the region was mostly healthy in Jan and early Feb. Most integrated chlor-alkali producers in Asia were running fully on better chlorine demand to produce polyvinyl chloride (PVC). However, from mid-February onwards global supply was somewhat constricted due to most major US producers’ curtailed production caused by a severe polar storm. Some major Asian producers also started turnarounds from mid-February onwards, further constricting supply.
Due to the production outages in the US caused by the mid-February polar storm, receivers of US material from Latin America and Australia replenished their inventories from northeast Asian producers. Demand in southeast Asia also saw a slow, steady recovery on improving economic prospects in 2021 amid the global rollout of coronavirus vaccines.
European caustic soda was long in the first half of the quarter before tightening from February onwards following production issues in the US. High prices for chlorine derivatives, particularly polyvinyl chloride (PVC), encouraged increased output in the chloralkali industry in early 2021. The severe polar storms in the US in February tightened both PVC and caustic soda availability and resulted in an upward trend for both contract and spot prices in March. Caustic soda demand was stable or lower in the first quarter as the European economy is still recovering from the effects of the coronavirus pandemic.
Caustic soda consumption in the hospitality industry has remained limited with paper production also severely affected although this was somewhat balanced by high consumption of pulp. Market players saw demand as similar to the previous year and as having recovered compared to its low point in the second half of 2020.
Caustic soda supply in Latin America was long at the beginning of Q1 due to strong demand from co-product PVC across the world. But the mid-February polar wave along the US Gulf Coast froze chlor-alkali production in Texas and Louisiana, resulting in tight supply in the US and an opportunity for higher March prices in Latin America.
Caustic soda demand in Latin America in early Q1 was somewhat sluggish, but it strengthened after the mid-February polar wave along the US Gulf Coast froze chlor-alkali production in Texas and Louisiana, resulting in tight supply in the country and no exports to Latin America. Regional producers saw increased inquiries from buyers. The situation supported higher March prices in Latin America.
Subfreezing temperatures in February caused power outages that shut an estimated 74% of US chlor-alkali production capacity for the second half of that month and into March. That severely disrupted US supply for weeks as producers worked to restore operational capacity. It also help producers get rid of bulging inventories of caustic that had built on strong demand and production of chlorine, caustic soda’s coproduct in the chlor-alkali production system.
US demand for caustic soda remained steady at its recent muted level on lower industrial activity resulting from coronavirus lockdowns. Demand for water treatment held at its usual seasonal slow point. Demand for domestic alumina production was also down on recent plant closures. The pulp and paper industry brought mixed demand, slower after the holiday shipping season boosted demand for packaging offset slightly by Internet and mail-order demand for packaging, firmer since the coronavirus lockdowns.
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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
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