Asia caustic soda uptrend to continue; supply to tighten

05:27' PM - Thursday, 14/03/2019

Liquid caustic soda prices in Asia are expected to continue rising in the near term on the back of tighter supply caused by turnarounds, as well as new contract volumes to Australia, and a possible resumption of shipments to India this month.

ICIS data showed average caustic soda prices in the week ended 8 March rose $15/dry metric tonne (dmt) from the previous week to $415/dmt CFR (cost and freight) SE (southeast) Asia amid increased enquiries.

Average prices on an FOB (free-on-board) NE (northeast) Asia basis also climbed $20/dmt over the same period to $370/dmt, or $5/dmt below the FOB China price range of $375/dmt, according to the data.

The FOB NE Asia price tracks shipments of 2,000-8,000 dmt from China, Korea, Japan and Taiwan, while the FOB China price range assesses cargo sizes of 10,000 dmt and above from China.

Spot caustic soda prices in Asia have mostly been on a general uptrend since mid-January this year.

While Chinese producers have previously opted to concentrate on the more lucrative domestic market since October last year, they are expected to return to the spot market once netbacks are agreeable.

Ongoing turnarounds in Asia since mid-February have also reduced spot availability.

In addition, Australia has seen new contract agreements this year with caustic soda producers in Asia instead of the US, and this is expected to tighten the regional supply-demand situation for 2019.

Selling pressures among regional producers are further reduced as shipments to India, a key market for caustic soda, are also expected to resume sometime this month, although no confirmed dates have yet been determined.

Shipments to the South Asian country had previously been curtailed due to the strict implementation of the rule requiring Bureau of Indian Standards (BIS) certification for imports since late October 2018. - ICIS -

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