Plant Outages Plague Sodium Hydroxide

April 21, 2022

Unplanned and planned plant outages have been plaguing the Sodium Hydroxide market. Most recently, disasters at two Chlor-alkali producers are causing ripples.

A chlorine leak and fire in a Plaquemine, LA plant did not result in any injuries but has disrupted production at a major Chlor-alkali producer. They have declared Force Majeure as of today.

Another producer plant in Baytown, TX had a major power outage that has caused substantial damage. They have subsequently declared Force Majeure and issued price increases.

For more information on how this may affect your Sodium Hydroxide supply or price, reach out to a representative.

Sodium Hypochlorite Contends with Chlorine Challenges

February 28, 2022Chlorine Bleach/Sodium Hypochlorite 12.5% for Pools

Bleach (also known as Sodium Hypochlorite) is made from a pale, yellow-green gas known as Chlorine. This gas is created during the Chlor-alkali process, as a “co-product” of Sodium Hydroxide and Hydrogen gas.

Although the word ‘Chlorine’ may immediately make you think of the notorious ‘pool smell’, Bleach is not the only end-use for the Chlorine molecule. Chlorine is also used to create at least a couple of dozen other products, including PVC, vinyl, resins, solvents, paint additives & herbicides. These other end-use products are in high demand, and in many cases produce a higher net return than Sodium Hypochlorite; producers can make more money off of them. In fact, Bleach is now beginning to be seen as a product that takes the Chlorine molecule away from other higher-value end-use applications.

Besides all of the internal competition for Chlorine, the Chlor-Alkali plants that produce Chlorine and Caustic Soda haven’t been running at full capacity. Chlor-Alkali plants and their investors have come to see that rationalizing capacity has helped to restore what has been considered lackluster margins for a number of years. As a result, we have seen multiple plants mothballed over the past couple of years, and the remaining plants are often being run short of full capacity.

Since there is less of the raw material Chlorine in the market, and many higher-value end-uses for the Chlorine that IS available, the price of Chlorine has shot up by very large increments (approx. 350%). The current challenge in the Chlorine market is making it hard for producers to commit to firm pricing for any length of time. It is also leading to the start-up of some mini salt-to-bleach plants (like a mini Chlor-alkali plant) here & there. It will be interesting to see if these new plants are able to add noticeable capacity and any real competition in the market. Another factor that could change the market, that is worth keeping an eye on, is an increase in import Caustic Soda. This could lead to a need to further reduce operating rates and tighten Chlorine supply even further.

In the meantime, prices for Sodium Hypochlorite are widely on the rise. Not surprisingly, other issues with logistics, like truck driver shortages, aren’t helping. With further questions on the Sodium Hypochlorite market, reach out to a representative.

Hurricane Ida Another Setback for Supply Chains, But…

September 16, 2021

…On a positive note, Ida was less devastating than the winter storms Uri & Viola last February.

(When supply chains have as many problems as they’ve had this year, yeah, we’re looking for the bright side!!)

It’s been a rough year for supply chains. Most recently, Hurricane Ida, a dangerous and major hurricane, made landfall in Louisiana on August 29. Ida caused widespread power outages, flooding and damage, including to many chemical production facilities. Not surprisingly, this has exacerbated the issues chemical supply chains were already facing. In addition to these primary issues, chemical plants have also been dealing with issues such as problems getting a consistent and reliable supply of feedstock materials since the storm. Although many plants experienced outages lasting weeks, the overall effect of the storm was less devastating than that of the winter storms Uri & Viola earlier this year.

Here we take a look at the effect Hurricane Ida had on some of the chemicals that were affected by the storm:

Chlor-Alkali (Sodium Hydroxide/Sodium Hypochlorite): Ida had significant impact to the chlor-alkali market, and numerous producers have declared Force Majeure following the storm. These producers had plants in the direct path of the storm, and shut down prior to the storm. Now the idled plants are waiting for raw materials and repairs. This has caused noticeable tightness in the Sodium Hydroxide market.

Isopropyl Alcohol (IPA): While we have seen some softening in the Isopropyl Alcohol market in recent months, Ida shut down 35% of capacity and appears to have halted the sliding trend.

Glycol Ethers: Glycol Ethers have been affected, as 23% of capacity went offline.

Potassium Hydroxide: The largest liquid Potassium Hydroxide plant in the world is in Louisiana and still not running due to power outage. After shutting down two days prior to Ida, it is expected to be online again soon.

Ethylene Glycol: Approximately 10% of capacity is offline due to Ida. Additionally, Ida affected nearly 60% of capacity for feedstock Ethylene Oxide. Ethylene Glycol supply has been short for most of 2021. While there has been considerable effort to rebuild inventories this year, this now likely won’t be possible before 2022.

In addition to plant closures, Ida has impacted logistics on other key commodities as well as many downstream chemical markets such as paints and coatings, plastics, and etc.

For more information about Hurricane Ida’s affect on your chemical supply, speak to a representative.

Sodium Hydroxide Weathers Another Storm

July 2, 2021

The historic Gulf Freeze in February disrupted supply of many chemicals for months to come. Long-lasting plant outages had major repercussions in the US Sodium Hydroxide market (as well as many others). Rebuilding depleted inventories has been a months-long effort, as production capacities lost continue to be restored.

Then, another major weather event hit the Texas / Louisiana Gulf Coast mid-May, this time in the form of a slow-moving cluster of thunderstorms. Major flash flooding resulted, as total rainfall from the storm measured in feet- not inches- in what become one of the wettest days in the area’s history. At least one major chlor-alkali producer experienced debilitating flood damage, and had to shut down for several weeks to clean up.

Another producer experienced a brine pipe issue that resulted in a Force Majeure event.

The Sodium Hydroxide market has weathered the storms so far, and capacity has been restored in the main. But these unplanned outages and Force Majeure declarations hindered production, extended lead times, and resulted in overall tightness of supply in the market.

To top things off, strong demand for Sodium Hydroxide in sectors such as Alumina and pulp & paper have reinforced this market condition. Price increases have been issued by multiple producers and are taking effect. For questions about the current situation of the Sodium Hydroxide market and how it may affect your business, reach out to a representative today.

Polar Storms Paralyze Chemicals

February 19, 2021

MANY chemicals have been severely affected by the winter storms Uri and Viola that rocked the Gulf Coast region this week, including Propylene Oxide, Propylene Glycol, Hydrocarbons, Acetone, Isopropyl Alcohol, P-series Glycol Ethers, E-series Glycol Ethers, Chlorine, Caustic Soda, and Hydrochloric Acid, to name a few. The weather crisis has caused dozens of plant outages, a flurry of Force Majeure notifications, and in some cases a shortness of supply. Products are delayed as large percentages of US capacity are offline- Ethylene 65%, Propylene Oxide 49%, Ethylene Glycol 89%, and etc.

This historic winter storm in the Gulf Coast has further exacerbated an already tight situation on Propylene Oxide and derivatives- see: Rising Propylene Shifts Market for IPA, Other Chemicals. The further impact of the storms is likely to be massive on a market already at 10-year-highs, and could take many weeks to resolve.

For questions on how this will affect your chemical supply and/or price, reach out to a sales representative.

Sodium Hydroxide Market Heats Up

May 12, 2020

As summer nears, the Sodium Hydroxide (Caustic) market is heating up.

For three consecutive months, producers have tabled increases, and they appear to be sticking.

Here’s how the COVID-19 virus led to a domino effect for Sodium Hydroxide prices… and how the dominoes fell.

  1. Amid the outbreak of the deadly COVID-19 virus, governments worldwide order lockdowns, business closures, and other drastic measures to slow the spread of the disease. Quickly, the world finds itself in an economic downturn.
  2. Construction projects (i.e. new home construction) and the automotive industry are particularly vulnerable in a downturn, and are significantly affected. The automotive industry virtually shut down worldwide. New home construction saw it’s largest monthly decline in decades.
  3. Construction and automotive industries are both major consumers of PVC plastics. Suddenly, demand for PVC is down 30-40%.
  4. PVC is one of the largest consumers of Chlorine, and essentially drives Chlorine production. Although Chlorine is also used to make Bleach, and demand for disinfectants is high, the significant reduction in demand for PVC has overshadowed the increased demand for Bleach. (Bleach is only one small outlet for Chlorine.)
  5. With 30% less Chlorine demand worldwide, Chlor-Alkali plants cut operating rates to 70%. With Sodium Hydroxide being a beneficial co-product of Chlorine production, it is now in shorter supply.
  6. Demand for Sodium Hydroxide is more stable than Chlorine, and has not taken such a hit. Certain markets for Sodium Hydroxide, especially pulp & paper, are in great demand (think toilet paper, packaging for online sales).
  7. With supply dropping more than demand drops, Sodium Hydroxide tightens. Increases from producers, rolled out for three consecutive months, are noticeable. Sodium Hydroxide is widely on allocation.

With questions about your Sodium Hydroxide supply/price, feel free to reach out to your Sales Representative. The team at CORECHEM is here to support our customers during this unprecedented time, and look forward to hearing from you!

 

COVID-19’s Impact On Chemical Supply Chains

April 8, 2020 COVID-19

The global COVID-19 pandemic has resulted in significant impact on chemical supply chains. Here we take a look at some of the chemicals that have been affected:

Isopropyl Alcohol (Isopropanol)

Sanitization products such as Isopropyl Alcohol have experienced skyrocketing demand. Unfortunately, manufacturers are simultaneously dealing with problems that are preventing them from supplying at full capacity. While two US producers are experiencing production issues, another is having trouble with raw material Acetone supply. A fourth US producer is scheduled to restart production of IPA, but this material will take a few weeks to come online. Meeting this unprecedented demand is proving to be a challenge, and prices have increased sharply.

A concerning trend has arisen in the IPA market in these unusual circumstances. IPA is in some cases passing through the hands of many distributors before it is finally delivered to the end user. At CORECHEM, our goal is to maximize the speed of product to the end user.

Ethyl Alcohol (Ethanol)

The Ethanol market essentially functions as two separate markets- Fuel Ethanol and Chemical, Food, and Pharmaceutical Grade Ethanol (Ethanol). These two markets are currently experiencing opposite extremes.

Most Ethanol plant startups in recent years have been tooled for Fuel Ethanol, creating an oversupply situation in the Fuel Ethanol market. Now, significantly reduced demand for fuel is compounding the oversupply problem.

Ethanol used for sanitization is experiencing record high demand. Prior to the COVID-19 crisis, Ethanol supply / demand was balanced. Now, prices are rising and supply is tight. Unfortunately, it is not easy for a Fuel Ethanol plant to switch over to creating Ethanol for other purposes.

Acetone

After years of a supply glut, the US Acetone market is tightening up. Acetone is a raw material used to produce Isopropyl Alcohol, now in high demand. Also, anti-dumping duty determinations have been finalized on Acetone being imported from five countries, resulting in imports from these countries stopping in November 2019.

Glycerin

Glycerin, a common ingredient in hand sanitizers and hand soaps, is also experiencing supply constraints and increased demand.  Glycerin is a co-product of bio-diesel fuel. Diesel fuel has experienced a significant decrease in demand, due to reduced travel and an overall slowed economy. As a result of less bio-diesel fuel being produced, less Glycerin is being produced. Also, fewer imports are entering the the U.S. market. Price increases are taking effect, and expected to continue for some time.

Medium-Chain Triglycerides (MCTs)

Medium-Chain Triglycerides (MCT’s) is another ingredient in hand sanitizers and hand soaps, and is experiencing significantly increased demand. Overseas plants that produce MCT’s have been shut down for employee safety, resulting in supply constraints.

Sodium Hypochlorite (Bleach)

Although Sodium Hypochlorite is experiencing increased demand due to usage as a disinfectant, reduced demand in other market sectors, such as downstream plastics, may more than offset the increase. CORECHEM continues to monitor the Chlor Alkali market (Sodium Hypochlorite and co-product Sodium Hydroxide) for noticeable supply / demand shifts.

Reach out to your CORECHEM sales representative to further discuss how these or other chemicals may have been impacted by the COVID-19 crisis.

U.S. Sodium Hydroxide Flows Into South America

June 4, 2019

U.S. exports of Sodium Hydroxide to Brazil have just increased exponentially. The crumbling Pinheiro neighborhood, and the world’s largest alumina refinery, are the reason why.

Petrochemical producer Braskem in Brazil has recently shut down salt mining operations following a governmental report citing the salt mines, combined with heavy rainfall, to be the cause of geological instability in the Pinheiro neighborhood.

Because salt is necessary for the production of Sodium Hydroxide, Braskem has subsequently declared force majeure and has begun importing product from the U.S. to fulfill contracts.

Another company in Brazil, aluminum producer Norsk Hydro, has begun importing a significant amount of additional Sodium Hydroxide from the U.S. A government-issued production embargo issued due to environmental concerns has recently been lifted. The Alunorte alumina refinery is allowed to run at full capacity after over a year of only being allowed to run at half capacity. Alumina production is one of the biggest consumers of Sodium Hydroxide in the world.

These additional significant exports to South America, combined with additional exports to Latin America, the Middle East and Asia (due to new alumina operations) are squeezing U.S. Sodium Hydroxide inventories. Domestic demand for Sodium Hydroxide is increasing as well. Meanwhile, several major U.S. producers have planned outages in the near future.

As a result of the shifts in the market, U.S. producers have announced increases. According to market prognosticators, there is a possibility that a portion of the increases could materialize in the third quarter. With questions about how this could affect you, reach out to your sales representative.

 

 

Tariff Hike Will Affect Chemicals

May 10, 2019

Last night, tariffs on 200 billion dollars worth of material imported from China increased from 10% to 25%.

U.S. China Trade War

The increase does include a number of commodity chemicals, and is likely to affect the global market. A few chemicals that could be potentially impacted are:

  • Sodium Hydroxide
  • Titanium Dioxide
  • Acetic Acid
  • Phosphates

For the complete list of items affected, see Tariff List-09.17.18.

CORECHEM continues to monitor the effect of the tariffs on commodity chemicals, and we have already taken steps necessary to minimize the impact on our customers.

Get in touch with your sales representative for questions about how this could affect you.

Caustic Soda Update

December 18, 2018

Supply: Over the past few years, several factors have led to a global tightening of supply for Caustic Soda. In China, lackluster margins for co-product chlorine and new environmental regulations resulted in steady decline of availability, particularly for US imports. In Europe, the chlor-alkali sector committed in 2001 to phase out mercury-cell technology by 2020. This became legally binding when Mercury-cell production was declared outside of Best Available Techniques (BAT) in 2013, resulting in a mandate to close these facilities or convert to Membrane technology by December 2017.

For the latter part of 2018, supply has been stable to strong, with only a few scheduled plant turnarounds and short-term disruptions, such as terminal flooding in Wilmington, NC during Hurricane Florence in September. Operating rates, however, have dropped from the 90’s to the mid-80’s as seasonal demand for Chlorine decreases.

Although no new ground-up plants are currently planned for construction, there has been recent uptick in Asian production, as well as a plant expansion in the USA, see Shintech Announces New Integrated PVC Plant Investment of $1.49 Billion to Bolster PVC Business.  Availability has also increased in the Asian and Middle Eastern markets.

Demand: On the demand side, there have been several changes recently. With the aforementioned issues in China and Europe, the USA has become a more viable and competitive global source for large consumers such as Alumina producers in South America and Australia. This has led to a steady increase in U.S. exports, to the point that the U.S. has become reliant on the export market. According to a recent ICIS report, the U.S. exports approximately 28% of current output. Latin America accounts for over half of U.S. Caustic Soda exports.

This new export market was drastically interrupted in October, when Hydro’s alumina refinery AluNorte in Brazil announced a full curtailment of operations to meet the demands of environmental authorities. This lead to an almost immediate backup in the U.S., as Alunorte accounted for a large percentage of exports. Alunorte was able to restart operations at 50% capacity, but in the meantime many Caustic Soda shipments were forced to be diverted elsewhere. AluNorte is expected to be back at 100% capacity sometime in early 2019, which is expected to balance out the current reserves.

Shift from Diaphragm Grade to Membrane Grade: An interesting twist to the market has been the steady shift in demand away from Diaphragm Grade and towards Membrane Grade product. This preference is due to the fact that Membrane contains less of the starting material, sodium chloride. The lower sodium chloride level reduces the rate of corrosion to costly equipment, particularly in paper mills, which accounts for one of the largest end-use markets. This shift has resulted in an increased availability of Diaphragm Grade, and a persistent tightness in availability of Caustic Soda Membrane Grade.

Pricing: While pricing steadily increased up until the middle of 2018, the market appears to have leveled off and starting softening in the fourth quarter of 2018. In addition, there is a growing disparity in the pricing of Membrane Grade vs. Diaphragm Grade, due to the shift in demand towards Membrane.

In spite of the recent softening, all of the major U.S. producers recently announced a $40/DST increase for all grades, citing lower operating rates and the anticipation of increased demand as AluNorte and other major consumers come back online. This increase is intended to go into effect in January 2019.

 

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