LONDON (ICIS)--European caustic soda contract prices for the second quarter have settled with increases on tighter availability.
Northwest Europe prices were assessed at €520-570/dmt FD (free delivered), up €50/dmt on the low end and €55/dmt on the high end.
Throughout the region, prices increased in a wide range - between €20-80/dmt - depending on starting point and the different circumstance of buyer and producer. The majority of increases were in the mid-double digits.
Prices in Germany, the Netherlands, Belgium and France were also in a wide range - the low €500s/dmt FD and below to €600/dmt FD - depending on starting point. The majority put prices in the low to high €500s/dmt FD.
Contracts were settled later in the quarter saw larger increases than those those settled earlier because of tightening availability at the end of April, according to sources.
In the Nordic countries, prices rose by similar levels compared to northwest Europe with increases quoted in the mid-to-high double digits. UK price increases were also at a similar level to northwest Europe, according to sources.
European caustic soda availability is currently low following production issues and the reduced global output of chlorine. Caustic soda is a co-product of chlorine and is produced during the same process.
Demand for chlorine has fallen rapidly in the wake of the coronavirus and its negative impact on demand in the downstream construction and automotive industries as well as on overall consumer demand.
In contrast, caustic soda demand is currently supported by stable consumption in water treatment applications and higher demand in hygiene applications. For the year as a whole however, caustic soda demand is expected to fall by approximately 10% following the near shutdown of the European economy.
Production issues at Nouryon and Vynova are ongoing. This has further reduced the availability of caustic soda and was one of the reasons behind the second-quarter contract price increase, according to sources.
In addition, KEM ONE's output from its Lavera site was disrupted and reduced 30-40% through April because of the knock-on effect of a maintenance shutdown.
Caustic soda is used in the manufacture of pulp and paper products, alumina, soap, water treatment and textiles.
Focus article by Chris Barker
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