Caustic Soda Market Outlook: Impact of Demand, Electricity Costs, and Production Halts

Caustic Soda Market Outlook: Impact of Demand, Electricity Costs, and Production Halts

Caustic Soda Market Outlook: Impact of Demand, Electricity Costs, and Production Halts

  • 28-Jul-2023 3:30 PM
  • Journalist: Motoki Sasaki

The Caustic Soda prices fluctuated in July 2023, resulting from the pessimistic demand in the downstream Alumina industry and lowered electricity costs across the global market. However, the Caustic Soda price trend concluded in the US market during July by the explosion at DOW Chemicals in the mid of July, reduction in the production rates, and low demand in the downstream sectors. Meanwhile, unlikely to the low electricity prices in Asia and Europe, US electricity prices rose this month marginally amidst a dip in the output and might impact the energy-intensive Caustic Soda market further in August.

In the USA, Caustic Soda prices were stable in the week ending July 28, 2023, backed by the halted production facility in Louisiana (USA) as a result of a fire that broke out at Dow, a chemical production facility, however, the company's Emergency Operations Center managed the situation at Dow Louisiana (USA). The Caustic Soda market slowdown was prompted by the sluggish demand from the Alumina and cleaning industry and ample stock availability with the market players since the Q2 of 2023. Thus, the production halt and electricity price hike have not affected the prices of the commodity majorly this week. Additionally, overseas inquiries from the regional market for Caustic Soda remained silent due to the rising fear of Hurricane season and weak operational rates in the third week of July 2023.

In China, Caustic Soda prices fell during this week in the Chinese market due to the high inventories and low demand from the Alumina industry. Moreover, from the supply perspective, the rates of shipping containers from East Asia and China to the US were constant this week, while Labour issues at Canadian west coast ports seem to be resolved, highlighting the logistics round-up in the mid of July 2023. Moreover, downstream offers for Caustic Soda from the Alumina processing industry were persistently down in the Chinese market, governed by the supply rise and modest demand.

As per ChemAnalyst, the Caustic Soda price trajectory is projected to remain on the downward side, along with the weakening of downstream inquiries in the global market and ample availability of stocks. In addition, the product's price might be affected by the upcoming Hurricane season and reduction in the operational rates at downstream sectors of the USA, prompting the price momentum of Caustic Soda during this time frame. On the upstream side, electricity prices may rise in the US market due to a shortage of supplies and rising consumption, which may challenge the production of the product further in August 2023. The Caustic Soda market through July has been marked by uncertainties and complexities, with several interconnected factors influencing its course. As the industry navigates these challenges, market participants remain attentive to developments that might steer the market in the coming weeks.



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