Caustic Soda Update

Updated December 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 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.

Check out our full list of Sodium Hydroxide products here.

NSF Certification

What is NSF?

NSF is the leading global provider of public health and safety solutions, and is continuously meeting the needs of the community around them. This includes stakeholders, government agencies, and the overall business community. NSF started out in 1944 as the National Sanitation Foundation, which focused on the sanitation of soda fountains. This was the beginning of many of the regulations and standards that they use today. In 1990, they changed their name to NSF International, keeping the NSF as an original part of their name.

The NSF focuses on extensive product testing and material analysis, and they frequently conduct unannounced plant audits to ensure that quality is being maintained. This helps protect food, water, consumer products and the environment from unintentional and intentional contamination. They also provide voluntary auditing, education, and risk management solutions to ensure that businesses are meeting the requirements needed. The NSF mark ensures that the products you are purchasing are thoroughly tested and comply with all NSF/ANSI standard requirements.

“NSF is key to making sure that products meet strict standards for public health protection.”

What This Means For Your Company:

Currently 48 of the 50 states In the United States of America require compliance to NSF/ANSI-60, for drinking water. CORECHEM Inc. has been an NSF certified facility for water treatment chemicals since 2014. Our customers can be assured that all of our products are of the highest quality, meeting or exceeding state regulations.

View list of NSF-Certified Chemicals

View list on NSF Website

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.