Caustic plant outage tightens supply in US river market

HOUSTON (ICIS)–The US liquid caustic soda market – already snug on supply and with sharp increases for April contracts on the table – tightened on Tuesday as one producer informed some customers that it will be unable to provide material from its terminals on the US Mississippi and Ohio river system.

Westlake Chemical, which has endured a longer-than-expected maintenance at its Calvert City complex in Kentucky, was heard to have bought several barges of caustic soda from another producer on Tuesday.

“It’s a helluva mess out there right now as far as supply,” a distributor who works in that region said.

Market players say that supply will be tightest in markets around Pittsburg, Pennsylvania; Cincinnati, Ohio; St. Louis, Missouri; and Chicago, Illinois.

The US market has seen tighter supply in the past year as consolidations and production capacity cutbacks have changed the playing field.

US production is at near-record levels, but export volumes are rising monthly. More volumes to Europe, Latin America, the Middle East and Australia have led to less availability in the US market.

Producers in Europe and Asia have also scaled back production and exports on new environmental rules in both regions. That has also meant less material imported to the US market.

Even before the Westlake issue exacerbated the supply situation, US market players expected that the separately proposed contract price increases of $60-85/dst (dry short ton) for April contracts would be largely accepted in the market.

Some customers have accepted increases of $60/dst.

Distributors have upped their prices by $40-60/dst. One distributor said it plans another increase for 1 May.

A distributor said that it is trying to procure a barge and is now looking in the Houston market.

“It is tight up the river,” another market participant said.

Because of maintenances that are expected to stretch into May, supply is not expected to move significantly toward balance until June or July.

Major US caustic soda producers include Olin, Occidental Chemical, Formosa Plastics, Westlake Chemical and Shintech.

Pictured above is a tug boat pulling a barge. Photo by: Design Pics Inc/REX/Shuttershock