Asia’s caustic soda market to remain well-supplied into December

SINGAPORE (ICIS)–Asia’s caustic soda market is expected to remain well-supplied into December amid sluggish demand and global economic slowdown.

Supply has been ample since late June, when India – the world’s largest PVC import market – removed anti-dumping duties on PVC cargoes of all origins except China and the US.

Integrated producers in northeast Asia except China subsequently pushed chlor-alkali run rates rates to feed co-product chlorine into the production of polyvinyl chloride (PVC).

But, on the other hand, since the electrolysis of brine produces caustic soda and chlorine in a fixed 1.1:1 ratio, the influx of caustic soda supply soon outstripped demand in Asia.

Moving into December, spot supply of liquid caustic soda is expected to remain healthy despite some northeast Asian producers lowering run rates amid squeezed chlor-alkali margins and higher power costs in winter.

Many market participants also noted that demand continues to be affected by pessimistic conditions in the global economy.

Caustic soda is used in the manufacture of pulp and paper products, alumina, soap, water treatment and textiles, while PVC sees different end-usage in applications such as pipes and profiles, in the automobile industry and for medical devices.

In the week ended 22 November, average spot prices for liquid caustic soda fell $15/dmt (dry metric tonne) FOB (freight on board) NE (northeast) Asia to an eight-week low of $265/dmt FOB NE Asia.

Focus article by Jonathan Chou

Container port in Qingdao, Shandong Province, east China
(Source: Photo by Yu Fangping/Pacific Press Via Zuma Wire/Shutterstock)