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.