Caustic Soda Price Acquires a Moderate Push in the US and European Market in December 2023

The Caustic Soda prices rose in the middle of December 2023 in the US and European markets, as the producers paused the production rates to sustain their margins. The prices of Caustic Soda were impacted by a shortage in supply, coupled with rising input costs overshadowing the impact of demand fundamentals.

The recent surge in the Caustic Soda prices in Europe resulted from the limited supply and lower production rates due to high operational costs. Kem One, a prominent player in the chemical industry, strategically halted operations at its chlorine and Caustic Soda production facilities in France. Kem One holds a significant position in the French chemical industry, with two primary production facilities. Furthermore, as a key player in the chemical industry, Kem One strategically chose to temporarily halt operations at its chlorine and Caustic Soda production facilities in France. The first plant in Lavera boasts an annual production ability of 341,382 tonnes for chlorine and 333,373 tonnes for Caustic Soda. The second facility in Fos boasts an even larger capacity, annually producing 635,710 tonnes of chlorine and a substantial 2,202,200 tonnes of Caustic Soda.

This decision raised concerns among Caustic Soda market participants about the slow recovery of demand in the domestic market, posing significant challenges to the profit margins of European producers. Consequently, European market players chose to scale back production rates to maintain their margins amidst uncertainty in downstream procurement enthusiasm and a sluggish economic environment. In November 2023, the German market experienced a positive inflation rate of 3.2%, as reported by the German Statistics Department, indicating a rise from the previous month.

Meanwhile, the American Caustic Soda market situation remained balanced during this time frame and prices witnessed stagnancy, with no marked shift in the purchasing sentiments from the downstream alumina and cleaning industry. The buyers paused purchasing activities in anticipation of an elevation in the prices due to the global container trade encountering logistical challenges due to various factors. The export prices for US Caustic Soda showed no variation in the mid of December, as per the latest analysis. The purchasing managers' index (PMI) reported a decline in manufacturing output for the 13th consecutive month in November. Additionally, the output in the U.S. chemical industry witnessed a decrease for the 15th consecutive month during the same period.

As per ChemAnalyst, the prices of Caustic Soda are likely to gain positive momentum in the coming weeks due to weak production rates and inadequate supplies. It is expected that the reflection of low demand fundamentals across the global economy likely overweighs the constrained supplies of the market situation for January 2023.