Caustic soda prices stable-to-soft amid mixed outlook
Asian caustic soda export prices from northeast Asia and import prices to southeast Asia were stable-to-soft this week on the back of mixed reactions from market participants following a fire at Formosa.
Taiwan’s Formosa Plastics Corp (FPC) is running its 1.33m dry metric tonne (dmt)/year caustic soda plant in Mailiao at a reduced rate following a fire at a propylene pipeline in the vicinity over the weekend, a company source said.
Suppliers’ sentiment in general is bullish that the fire at Formosa will provide significant support on prices and thus they were reluctant to reduce their prices further this week.
Meanwhile, buyers were adopting a cautious stance amid the uncertainty in price direction and preferred to wait-and-see at the moment, market sources said.
Producers in South Korea and Taiwan remained out of the spot market as they are concentrating on supplies to the domestic market as well as contractual shipments to Australia and the US. Several of them mentioned that they will not have any spot quantity for the rest of this year.
Northeast Asia
The decline in caustic soda export prices from northeast Asia was halted and prices were stable-to-soft this week, echoing ongoing negotiations.
Discussion levels were heard at $370-380/dmt FOB China and a 3,000-4,000 dmt cargo was heard fixed at $370/dmt FOB South China to US West Coast but this could not be verified.
Lower offers at $350/dmt FOB China could still be heard in the market but producers in China were heard to be seeking higher prices for caustic soda because of poor chlorine values and some producers reportedly lowered their chlor-alkali operation rates to prevent further price cuts.
Several producers were adamant in maintaining their offers at $400/tonne FOB China but it failed to rouse any buying interest as buying ideas fell below that level.
A major producer in Japan was heard to be maintaining its target price at above $400/dmt FOB Japan but no official offer for September shipments has been announced.
Chinese domestic market
The domestic prices of 32% liquid caustic soda in north China fell by yuan (CNY)50-62/dmt to CNY1,650-2,438/dmt EXWH.
Meanwhile, the domestic prices in the coastal region of eastern China declined by CNY63/dmt to CNY2,125-2,250/dmt EXWH.
In north China, downstream demand in the Inner Mongolia market is subdued. However, the market outlook is optimistic in view of expected plant turnarounds at several chlor-alkali facilities in the near future.
Producers in Tianjin maintained their offers this week following previous price cuts. Market participants were heard to be adopting a wait-and-see stance until a clearer price trend emerges in the coming weeks. Nonetheless, limited exports are heard to be dampening market sentiment, market sources said.
In east China, chlor-alkali producers in several areas in Jiangsu and Zhejiang reduced their operating rates as a result of power rationing. This, in addition to low rates of other producers that were facing equipment problems, led to a reduction of supply in east China.
As a result, there was a slowdown of price cuts in the region. However, persistently weak downstream demand is expected to continue to exert downward pressure on prices.
Several market participants forecast that further declines will be limited as producers were close to reaching their breakeven prices amid low chlorine values.
Southeast Asia
Caustic soda import prices to southeast Asia were stable-to-soft this week, reflecting prevailing buy-sell ideas.
Offers were heard at $420-430/dmt CFR SE Asia while buying indications were largely at $410/dmt CFR SE Asia, with some buying ideas falling below $400/dmt CFR SE Asia levels.
Buying interest is still limited as buyers were delaying their purchases for as long as possible in view of falling prices.
However, suppliers were optimistic that prices are nearing its turning point as buyers are expected to return to the market in the near term.
Freight rates
From northeast Asia to southeast Asia: ~$40-50/dmt
($1 = CNY6.44)
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