AFPM ’19: US caustic soda oversupply may be ending – producer

SAN ANTONIO (ICIS)–The long supply of US liquid caustic soda, which has defined the market for the past six months and sent prices down sharply, is coming to an end, a US producer of the alkali said on Sunday.

Spot export sales in recent weeks have cleared out surplus inventory of each of the major producers in the US Gulf, the producer said as he traveled to the International Petrochemical Conference (IPC).

Additionally, in Australia, alumina refiners are examining arbitrage for US material with prices in a trough below $300/dmt (dry metric tonne) FOB (free on board) US Gulf for the size parcels that alumina refiners usually procure.

Large orders from the alumina industry would clear out significant volumes of inventory, if they shop the US Gulf – and buy.

Other parts of the market, like business to Latin America, the readiest market for US material, is seeing less availability.

“Buyers are seeing only small numbers of offers, and those are for only small volumes,” the producer said.

Additionally, three US producers are entering maintenance turnarounds in the coming weeks, he said.

His assessment got mixed responses from a trader and a distributor in the US domestic market.

US customers have had no difficulty finding product and prices continue to decline at regional distributor terminals.

“Every sign is that supply is plentiful and contract price increases for April are off the table,” a domestic distributor said.

US producers nominated April contract price increases of $50-80/dmt in late February.

Market participants were unusually skeptical at the time because of the state of supply and no sign of when it might end.

Even the expected return to full production of an alumina refinery in Brazil, that would take an additional 25,000 dmt/month out of the US Gulf, will not soon make a big difference.

“Nothing,” said the trader of the immediate and near term-effect. “No impact.”

The issue will likely be reconciled during April as discussions for the contract outline the issues more clearly.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.