Caustic Soda Market trends
As of the close of May, the Chinese Caustic Soda market witnessed a notable surge in its average price, reaching approximately 4300 yuan per ton for 99% flake soda. This surge, indicating a 9.3% increase, is a result of multiple factors contributing to the counterattack growth observed in the domestic chemical industry market in 2022.
April 2022
In April 2022, China recorded a substantial increase in the export volume of caustic soda, totaling 253,100 tons. The majority of these exports consisted of liquid caustic soda, amounting to 207,100 tons, with solid caustic soda contributing 46,000 tons. The cumulative caustic soda exports from January to April 2022 saw a remarkable year-on-year surge of 155%. Notably, the export of liquid caustic soda experienced an impressive growth of 237%, while solid caustic soda exports increased by 24%.
The prevailing market conditions indicate a tightening of caustic soda supplies in certain regions, coupled with robust downstream demand. However, downstream profits for caustic soda are under pressure. Consequently, the short-term outlook anticipates that the caustic soda price will remain relatively stable, with limited declines.
May 2022
The domestic caustic soda market in 2022 displayed positive momentum, with the average market price of 99% flake soda reaching around 4300 yuan per ton by the end of May, showcasing a notable increase of 9.32%. This upward trend in prices can be attributed to factors such as reduced upstream operation and output, increased demand from downstream enterprises, and rising production costs due to international market volatility, including hikes in crude oil prices.
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Analyzing the regional distribution of caustic soda production capacity reveals that North China, Northwest China, and East China collectively account for around 79% of the country’s total capacity. Shandong stands out as the province with the largest caustic soda production capacity, while Inner Mongolia has emerged as the second-largest region following the shift of the PVC industry to the western region.
Despite a year-on-year decrease in national caustic soda output in April 2021, the overall trend indicates a consistent increase in production capacity from 2016 to 2021. The prevailing model of supplementing chlorine with caustic soda has led to high-load operation but poor profits, resulting in a slower expansion of caustic soda production capacity in China.
In summary
Propelled by initiatives in new urbanization, China’s demand for caustic soda has experienced rapid growth, reaching 37.54 million tons in 2021. Expectations for 2022 suggest a further increase to 38.67 million tons. In response to domestic sales pressure, China has heightened its enthusiasm for caustic soda exports, evident in the significant surge in export volumes witnessed early in 2022.
while certain regions experience tight supplies in the caustic soda market, supported by robust export markets, downstream demand and the overall market environment remain optimistic. However, the pressure on downstream costs may limit substantial price increases. The short-term outlook suggests that the caustic soda price will likely remain stable or experience slight declines.
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