US Caustic Potash Market Sustains Stability Amidst Constrained Downstream Demand

At the start of July, the Caustic Potash prices stabilized across the North American region owing to the abundance of stock availability and muted inquiries from the downstream sectors, including agrochemicals, liquid fertilizers, and the cleaning industry in the face of weakening economic conditions, and low buying enthusiasm. The lowered demand in the fertilizer industry and ease in the energy prices supported the stagnancy in the Caustic Potash prices.

The downstream demand for Caustic Potash was worsened than expected in Q2 and destocking opted by the market players at lowered profit margins in the US market. Additionally, given the prolonged destocking and restrained consumer buying, weakness could persist for some time. Even if reducing stock levels were to reach its conclusion, it would not address the issue of fundamental weak demand and excessive production capacity within the commodity chain. Caustic Potash manufacturer Olin could struggle next year if the prices of the commodity fall, as per the market analysis. According to the US Bureau of Labor Statistics, the (Consumer Price Index) CPI indicated an increase of 0.1% in May 2023 and is anticipated to elevate marginally in June. The manufacturing Purchasing Managers’ Index (PMI)  for the USA– has been pointing down for June 2023, with no recovery in sight as indicated by the US Census Bureau of Statistics.

Moreover, the buyers adopted a cautious approach towards the uncertainty and gloomy outlook across the global market for Caustic Potash amidst geopolitical tensions between China and the US. Caustic Potash producers in Southeast Asia have been grappling with shrinking downstream demand and opted to run their plants at reduced rates.

The Caustic Potash exhibited stable prices throughout June 2023 in the USA, backed by minimal market transactions across the regional market and stable downstream demand from the downstream industry, while a reduction in the production run rates narrowed the demand-supply gap during this time frame. In June, inflation in the US continued to be high, prompting the US Central Bank to pursue elevating interest rates to limit the impact of rising prices and the weakening of economic conditions in the US market.

As per ChemAnalyst, the Caustic Potash price trend might get influenced by the slowdown in demand from the downstream industry, including cleaning and fertilizer segments and surplus availability of stocks across the regional market. In the USA, the upstream and downstream sides of Caustic Potash indicated bearish market sentiments ahead in the coming weeks, and product prices will follow a downward trend in the H1 of the third quarter.