Caustic Soda Market Reverses in the Wake of US Winter Storm

The demand for caustic soda has gradually been recovering following a low point seen in
Spring 2020. Currently, across much of the world, demand is returning to pre-COVID-19 levels as international travel slowly begins to re-open, increasing the need for hotels, sanitisers and cleaning products. The soaps & detergents sector, though a very small consumer, has been one of the most affected by the pandemic.

Over the past few months, we have seen very strong demand for PVC driving chlorine demand and increasing operating rates. Because of this, caustic soda was oversupplied but now, following the winter storm that hit the US in February, average operating rates in February crashed to 60%, making caustic soda supply tighten quickly.

There are still some operating issues in the US as the country recovers from the impact of the US winter storm which resulted in a large proportion of the country’s capacity being offline for a period. Up to 85% of caustic soda capacity in the US affected and the main issues encountered were frozen valves and pipes as the plants were unprepared for such cold weather. It has been reported that a producer has had issues with shipping product on time, even in early Q2. Spot truck deals are still being concluded with large premiums above contracted prices.