US caustic soda spot export prices return to pre-Hurricane Harvey level

HOUSTON (ICIS)–Lengthening supply in the US Gulf has pushed US liquid caustic soda spot export prices down to pre-Hurricane Harvey levels for the first time since the hurricane blew across the Texas Gulf coast.

Business to Europe during the first half of October was done at $400/dry metric tonne (dmt) FOB US Gulf. 

That brought the ICIS range down to a bracket of $400-500/dmt FOB US Gulf, a sharp drop of $50-80/dst from the previous month’s level.

Prices have also dropped for spot barges, down $20/dry short ton (dst) on business done this month in that newly reinvigorated market. And prices have also lowered at distribution terminals on the Mississippi and Ohio River systems.

“We are seeing the repercussions of the Alunorte outage,” a producer said later in the week.

That is a reference to the giant alumina plant in northern Brazil that is also the largest single export customer of US material sourced through three suppliers, but with one being the main source.

The plant took 600,000 dmt of US caustic in 2017,but was ordered to cut operations to 50% in March.

That removed from the US Gulf of 24,000 dmt/month of baked-in sales. In early October, the company shut completely for a few days, prompted the unleashing of numerous spot parcels.

The new mid-point for the ICIS spot export range holds at $450/dmt, slightly beneath the $455/dmt midpoint held in the week before the hurricane made landfall in the last week of August 2017.

Prices have remained high since the storm knocked out significant production capacity only two months before European plants that made caustic via the mercury-cell process were required to to shut operations.

Those factors and others kept US caustic prices high into the first quarter of 2018, when they began a slow decline that was hastened in recent weeks as the longer supply became evident.

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

Pictured: Container ship being loaded at Hamburg’s harbour
Source: Lutz Gerken/imageBROKER/REX/Shutterstock