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 Q2 2021
Supply from Japan and South Korea was limited amid several plant turnarounds. A Japanese producer lowered operating rates from early June until September, due to curtailed chlorine output amid some technical issues at its ethylene dichloride (EDC) unit. However, some producers from China were interested to offer to the spot export markets amid more favourable netbacks compared with domestic yuan-denominated prices.
Demand in several southeast Asian countries such as Malaysia and Vietnam was lackluster due to rising coronavirus infections. However, market sentiment for the major alumina sector improved amid rising aluminium prices. Demand for Asian material from alumina refiners in Australia remained supported, due to curtailed output from US producers amid technical disruptions. Indonesia’s caustic soda consumption also improved amid several alumina and nickel smelter start-ups in the country.
Caustic soda supply was tight in Q2 following long-running production issues in the US caused by polar storms in February. Further outages were also caused by torrential rain in Q2 which pushed up export prices to the US East Coast. In addition, a spate of production issues in Europe combined with peak season for maintenance turnarounds which further restricted global output. These trends were partially counterbalanced by higher production of chlorine due to strong demand and prices.
Caustic soda demand gradually increased following weaker consumption through most of 2020, although it is expected to remain below previous levels for the remainder of 2021 due to limited tourism. Lower demand for paper in Europe due to less hours worked in offices was offset by the increased use of carboard in packaging, although Stora Enso announced plans in April to close two additional pulp and paper mills.
Supply was somewhat long in Q2, which prevented prices from rising. This was due to strong demand from co-product PVC. Maintenance and force majeures at US chlor-alkali plants resulted in tight US availability for exports, which has contributed to more balanced markets in Latin America.
Demand in Q2 was particularly sluggish due to the Easter holidays and the economic impact of the pandemic. Buying activity was mostly focused on domestic or regional product as maintenance and force majeures in US chlor-alkali plants resulted in tight US availability for exports.
Supply in Q2 improved compared with the sharp reduction in Q1 when more than 70% of production was offline after the February freeze in Texas and Louisiana. Production improvements slowly increased output through Q2, but some limitations were still felt in the market at the end of the quarter. Co-product chlorine was particularly tight throughout the quarter.
Demand was relatively weak at the start of the quarter on seasonal factors and on a lack of industrial activity, including subdued refinery and chemical operations and export markets weakened by coronavirus outbreaks. The demand for water treatment and manufacturing improved somewhat through the quarter, though only in incremental increases. The Q2 ended with demand near its historical levels in the domestic market.
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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