Asia caustic soda supported; supply-demand starts to balance out

SINGAPORE (ICIS)–Liquid caustic soda prices in Asia are expected to remain supported as regional supply-demand is starting to balance out, with producers preparing to resume exports to the key India market amid upcoming turnarounds.

A deep-sea vessel approaching the Port of Kochi in Kerala, India. (Source: imageBROKER/REX/Shutterstock)

Average caustic soda prices for the week ended 8 February rose $10/dry metric tonne (dmt) from the previous week to $310/dmt FOB (free on board) NE (northeast) Asia, according to ICIS data.

Spot prices have risen over the past three weeks after hitting their lowest since April 2016, as producers indicated manageable inventory levels and no urgent need to offload shipments amid more enquiries from southeast Asia.

Average prices of caustic soda in southeast Asia for the week ended 8 February also rose $15/dmt from the previous week to $370/dmt CFR (cost and freight) SE (southeast) Asia.

Producers from northeast Asia and the Middle East are preparing for exports into India on expectations that approvals from the Bureau of Indian Standards (BIS) on some of these cargoes will be given as early as March, according to market sources.

The BIS certification requirement had previously hampered exports to India.

Upcoming seasonal turnarounds in northeast Asia starting from mid-February are also expected to lower spot supply.

Scheduled turnarounds for liquid caustic soda in Asia

Producer	Capacity (dmt/year)	Scheduled maintenance period	Location
Asahi Glass	325,000	Mid-February-late March	Chiba, Japan
Lotte Fine Chemical	150,000	March-mid April, around 50 days	Ulsan, South Korea
PT Asahimas Chemical	350,000	March, around 1 month	Cilegon, Indonesia
Hanwha Chemical	306,000	April, 15 days	Yeosu, South Korea
Tosoh	1,188,000	May, around 1.5 months	Nanyo, Japan
Tokuyama	498,000	September, around 1.5 months	Tokuyama, Japan

Furthermore, demand from the downstream alumina sector is expected to increase this year.

Production at Emirates Global Aluminium’s (EGA) new Al Taweelah alumina refinery in the UAE is also expected during the first half of this year. The refinery is initially expected to consume around 100,000 dry metric tonnes of caustic soda annually, according to market sources.

Prior to recent gains, spot caustic soda prices in Asia had been depressed by ample availability since October last year as exports to India were halted abruptly due lack of certification from the BIS.

The south Asian country is a major importer of caustic soda, importing 411,033 liquid tonnes of the material in the financial year ending March 2018, according to official data.

Focus article by Jonathan Chou