Caustic Soda price Soar marginally amid supply disruption and firm downstream demand

Caustic soda prices witnessed a surge in the second week of April due to the strong global demand from the downstream Alumina industry, soap and detergent segment. The primary Caustic Soda consuming soaps and detergents segment is observed to be driven by the fear of a resurgence in Covid 19 in several Asian countries. Moreover, soaring energy prices resulted in a surge in Caustic Soda prices in the European market amidst the ongoing geopolitical conflict between Russia and Ukraine.

Demand for Caustic Soda from the downstream Alumina industry is the consequence of halted production amid higher electricity prices in the regional market of Europe. The conflict between Russia and Ukraine has ultimately resulted in the supply disruption from key energy exporter Russia. Moreover, Russia also contributes to the global supply of crucial mineral Bauxite used to manufacture Aluminium. The increased electricity cost is crippling the alumina industry. Alcoa, a significant Aluminum manufacturer, has already stopped production at a plant in Spain for two years. Meanwhile, another manufacturer, Slovalco, has planned to reduce its production capacity to nearly 60%.

In China, a resurgence of Covid 19 has contributed to the global supply disruption of Alumina as China is considered the primary supplier for Alumina globally. Caustic Soda is used in the refining process in the alumina industry. Demand from the downstream Alumina industry surged due to the application of several government construction projects in Asia. Meanwhile, the shortage of coal used as power in most sectors across China also consequently resulted in surged prices of Caustic Soda by nearly 2% in the second week of April.

As per ChemAnalyst, “The price of Caustic Soda is likely to surge in the month of April due to the increasing demand from downstream Alumina industry as a result of several initiatives by government in the construction sector, and soaps and detergents segment globally as a consequence of fear of resurgence of Covid 19 in Asian countries. The surge in energy prices is also expected in the coming months amid ongoing conflict between Russia and Ukraine”.