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 2019
The European caustic soda market remained long early in the second quarter on the back of high domestic production and strong availability via imports. However, supply tightened late in the quarter. Global availability tightened and turnarounds affected a significant percentage of European capacity. Monthly contract markets also tightened in late May and June as a result of higher prices and lower availability via imports.
European caustic soda demand was stable to weaker in the second quarter compared to the first. Some European markets saw a more cloudy economic outlook, which resulted in lower downstream demand in southern European markets and Iberia. In northwest Europe, feedback did not indicate any reduction in demand. Chlor-alkali production rates also remained high in the most recent Eurochlor data, indicating that demand has not collapsed for chlor-alkali products.
Caustic soda supply in Latin America during Q2 was ample, but became tight in Brazil in May after Braskem stopped salt extraction operations at its Alagoas mine due to subsidence. As a result, Braskem had to shut down its caustic soda facility in Maceio. Brazilian buyers imported material from Peru, Argentina, the US and even Saudi Arabia. Alumina refiner Alunorte ramped up operating rates, with the expectation of reaching 85% in July.
Caustic soda demand in Latin America during Q2 started sluggish on ample supply, but increased in mid-May. This was because of a shortage of brine and caustic soda caused by Braskem’s salt extraction halt at its mine in Alagoas. This disrupted production in the chlor-alkali chain and drove buyers to procure product from other sources in neighbouring countries. The two production embargoes on Alunorte were lifted, allowing the alumina refiner to ramp up operating rates and consume more caustic soda.
US supply of liquid caustic soda stretched to nine months, with growing domestic supply that began when the largest alumina plant outside of China, the largest buyer of US export caustic soda, cut operations by half. That left stranded an estimated 25,000 dmt (dry metric tonnes)/month in March. By June, inventories were gathering and continued to build, leading to 10 months of declining contract prices in the US.
US caustic soda demand held steady until early in the second quarter, when a Braskem chlor-alkali plant in Brazil was shut down by the government on environmental reasons and a long-constrained alumina refinery returned to full operations, increasing export demand out of the US Gulf by 35,000 dmt/month, reducing US inventories. Domestic demand remained steady and domestic buyers agreed that demand was steady-to-strong during the quarter.
Supply in Asia was long as Chinese producers returned to the spot market, adding to regional availability. This was due to China’s weak downstream demand on stringent safety concerns in the country following a series of fatal explosions in China’s Jiangsu province in March. The lengthening supply offset an expected uptrend as numerous producers from northeast Asia and the Middle East obtained approvals for exports into the key India market.
In May, a major downstream alumina refinery in Shaanxi province closed due to red mud spill issues. On the other hand, another alumina refinery’s new capacity in Shandong province started up in June, but the slowing Chinese economy and stringent safety concerns offset any increase in demand. Demand in southeast Asia saw a seasonal lull during the Ramadan fasting month, and gradually recovered after the Eid ul-Fitr holidays.
We offer the following regional Caustic soda analysis and news coverage to keep you informed of factors and developments affecting prices in the Caustic soda marketplace.
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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.
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