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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Sodium Hydroxide Market Update

March 12, 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 have resulted in steady decline of available Caustic Soda, particularly for the export market. 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.

Shorter-term but nonetheless significant disruptions have come as well. In August 2017, the landfall of Hurricane Harvey in the U.S. Gulf Coast resulted in disruption of over 30% of U.S. chlor-alkali production. Further to this, a producer in Brazil experienced a fire on January 15, 2018, resulting in an immediate gap of 30,000 dmt of caustic soda, subsequently sourced from US producers.

There does not appear to be a near-term solution to the supply issues. With a relatively balanced demand for chlorine, there are currently no new chlor-alkali plants under construction in the USA.

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Demand: With the issues in China and Europe, the USA has become a more viable and competitive global source for Caustic Soda for large consumers such as Alumina producers in Australia. This has led to a rapid increase in U.S. exports, as the spot export price for Caustic Soda has tripled in the last 24 months. In addition, east coast U.S. imports from Europe have significantly decreased, diverting U.S. Gulf Coast shipments to the U.S. east coast to fill the gaps. Along with this is the steadily growing economy and demand for Caustic Soda in other markets such as chemical manufacturing, pulp & paper, bleach, soaps & detergents, textiles, and water treatment.

Pricing: Caustic Soda producers have steadily announced price increases to account for the increasing export demand and constrained supply. February 2018 announcements for Liquid Caustic Soda ranged from $60.00 to $85.00 per DST (Dry Short Ton). Dry caustic soda beads have followed suit, with a February announcement of $0.05 per pound.

Chlor-Alkali Market Update – February 21, 2017

The Chlor-Alkali market has been relatively steady for the last 12 months, but there are some recent developments that are well to take note of.  These are likely to continue putting pricing pressure particularly on liquid & dry caustic soda, as well as hydrochloric acid.

 

Liquid Caustic Soda 50% (Sodium Hydroxide)
  • Over the past 3-4 months, at least 3 plants in the U.S. Gulf Coast have been through significant shutdown periods, both planned & unplanned.
  • Europe is progressing towards a phase-out of mercury-cell caustic/chlorine production by the end of 2017.
  • Some inland Asian producers are having difficulty competing for exports, due to aging infrastructure to transport material to the coast.
  • U.S. exports have increased dramatically due to increasingly attractive export prices.

 

Dry Caustic Soda Beads (Sodium Hydroxide)
  • Raw material (Liquid Caustic Soda) prices are on the rise.
  • U.S. producer is behind on production due to limited availability of raw material.
  • Chinese New Year and limited space on ocean lines are limiting Asian supply.
  • Demand for dry caustic in drilling mud is increasing due to the recent uptick in U.S. oil production, that has resulted from steady recovery in oil prices.

 

Hydrochloric (Muriatic) Acid
  • Same production outages for Caustic Soda have impacted supply of chlorine for Hydrochloric Acid production.
  • By-product acid supply is also impacted by recent outage in the Gulf Coast.
  • Recent uptick in oil production has resulted in increased demand for Hydrochloric acid used in fracking (hydraulic fracturing)
  • There has also been an increase in demand for general industrial use, as the manufacturing sector recovers.