Quarterly Update on Global Caustic Soda Market
For the Quarter Ending June 2021
The American Chlor-Alkali industry operations were seen improving after the industry suffered a setback from the polar winter storm Uri in the US gulf coast region which knocked out three fourth of the region’s chlor-alkali production. The operating rates improved to 70% in the North American region which proportionally enhanced the regional supplies in the first half of the quarter, whereas the demand outlook improved in the later half as the downstream activities picked up. Brazil, Australia, and Jamaica were the top export markets for the US Caustic Soda. It is observed that the US chlor-alkali capacity fell by 6% on m-o-m basis in May. Amidst the operational issues due to equipment failure, the Formosa Plastics facility in Westlake, Texas declared force majeure in early June. Demand is majorly focused from the water treatment and alumina production with FOB Texas pricing discussion settled at USD 320 per tonne in June.
During the second quarter of 2021, Caustic Soda supplies in the Asia Pacific region were sufficient to cater to the strong market demand as production rates were flared up in the Chinese domestic market. However, some constraints were witnessed during the May Day holidays in early May. Whereas in India, industrial and commercial activities were restricted as the country was largely impacted by the second COVID wave. Caustic demand showcased mixed sentiments in Northeast and Southeast Asian countries. Offtakes were firm from the downstream water treatment and alumina industries. The pricing trend in India observed a constant decline of 13.64% from the start of Q2 till the 2nd week of June since. Ex-Works prices in India settled at USD 442 per tonne.
With the resumption in market supplies, the European Caustic Soda supplies were seen easing with resumption in overseas supplies. Netherlands turned out to be the second largest importer of Caustic Soda with the volume totalled around 58 KT in the first four months (Jan-April) in Europe. Supply conditions in the second quarter improved in the European region as the operating rates at several plants were ramped up and the imports from the US improved in the second half of the quarter. Demand outlook in the European market remained constant from the downstream water treatment and alumina manufacturing sectors.
For the Quarter Ending March 2021
During the first quarter of 2021, Caustic Soda supplies remained disrupted as the freeze weather hit the US gulf region, resulting in shutdown of some major Chlor-alkali units in Texas such as Westlake Chemicals, Olin Corp., Oxychem and Formosa for over several weeks. The shutdown of several plants, however, did not affect the prices of Caustic Soda in the region which were assessed around USD 280/mt FOB Texas. Increased consumption from the downstream sectors significantly drove the demand of Caustic Soda in the regional market throughout the quarter.
Caustic Soda supplies remained balanced in the first quarter of 2021, as various Asian producers scheduled a maintenance turnaround, however the situation seemed to balance out as a key producer resumed its unit during the end of January. The demand was firm during the first half of the quarter ahead of Chinese Lunar New Year holidays, later due to improved consumption from the automotive and alumina industries. The Indian Caustic industry reported dampened demand, and a further hit as the government’s trading arm denied any recommendations to impose Anti-Dumping Duty (ADD) on the Chinese Caustic Soda to lend support to the downstream consumers. This left a significant room for the inflow of cheap Caustic imports in India.
The supplies of Caustic Soda in the first quarter of 2021 slumped, as the Caustic Soda market hit historically low. In the Northwest Europe prices of Caustic Soda were averaged under USD 180/MT FOB in early March. The demand however surged as the majority of Caustic Soda supply was diverted toward the manufacturing of PVC production. Overall demand however remained stable with the economy still grappling to fully recover from the effects of the pandemic during 2021.
For the Quarter Ending September 2020
The Asian Caustic Soda market bounced back in Q3 2020 after chlor-alkali rates improved on the back of greater Chlorine demand for producing PVC. Due to slowed domestic consumption, some producers in Asia turned to the export market to ease stock piling inventories. Supply chains in many downstream sectors eased with ease in travel restrictions. Alumina production rates which remained staged to 75% in Q2 showed slight improvement with resurgence in industrial activity. Production rates in other downstream sectors such as pulp and paper, textile printing, dyeing and chemical industries are also returning to norm. Players have reported strong demand from hygiene applications such as bleach and soaps since the start of the year.
The third quarter Chlor-Alkali market outlook remained pressured owing to hurt sentiments in the United States as major Chlor-Alkali producers remained shut throughout the quarter after major parts of the US were put on alert due to Hurricane Laura. Scheduled maintenance turnarounds further exacerbated the supply chain issues. Downstream pulp and paper industries operated at curtailed rates making Caustic prices slip to staggering lows as number of infections continued to surge. The demand for liquid Caustic Soda for the production of flakes has slowed significantly, as producers have been unable to supply cargoes deterred by the economic fallout from the coronavirus slowdowns.