Caustic Soda Prices in US to Remain Firm in Q1, No Relief in Supply Expected due to Series of Turnarounds
- Journalist: Jacob Kutchner
USA has been facing shortage of chlor-alkali products ever since the winter freeze in 2021. Inventories of Caustic Soda in US were further pressurised due to Ida hurricane Q3 2021. Even though availability marginally eased in mid-December with resumption in supplies from a major producer, Vinnolit in Germany, however spate of turnarounds scheduled in Q1 2022 have again stressed players over their existing inventory levels.
Olin, a mega produced of chlor-alkali in US with a capacity of 550 MTPA Caustic Soda and 500 MTPA of Chlorine in Alabama unit, has announced temporary outage at its plant in January. The shutdown is to completely resolve the operational issues that have been interrupting the output since July 2021. Besides, another plant of Olin with altogether 3 million MTPA capacity in Texas, is up for a scheduled maintenance in Mid-March, this turnaround is likely to extend for a period of 1 month. In addition to this, Formosa Plastics with a 736 KTPA Chlor-Alkali capacity in Texas, has its turnaround scheduled in mid-February. Shintech is also planning to implement a turnaround at its chlor-alkali unit in Louisiana in March.
Series of turnarounds in Q1 are likely to adhere unprecedented pressure upon market participants of Chlor-Alkali across the region. Fearing the upcoming shortage of chlor-alkali, buyers have already begun stockpiling cargoes to abate any hurt to the output of the downstream products. As local manufacturers are already struggling with low inventory levels, they are compelled to increase the prices of the products to fetch maximum netbacks.
As per ChemAnalyst, “the demand for Chlor-Alkali is likely to remain strong in the coming months. Despite of the sturdy demand pattern, the unprecedented drop in the availability of Caustic Soda and Chlorine is expected to challenge the revenue of chlor-alkali industry in Q1. Amidst the upcoming regional shortage, demand for exports from Asia to North America is expected to witness a steep surge in the first quarter of 2022.