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European Caustic Soda Market Tightened
May 02, 2018

    Informed sources said recently that although the current European caustic soda spot prices remain stable, the US sanctions against Rusal may cause supply shortage in the European caustic soda market.
    The United States’ sanctions against the world’s major aluminum producers and caustic soda buyers, Rusal, are expected to cause excess supply in the US caustic soda market, especially if some Brazilian aluminum smelters currently reduce operating rates. Market participants said that due to the expected oversupply, US caustic soda suppliers are selling diaphragm-grade caustic soda products for four to five months regardless of price. As long as the market has demand, they are willing to sell at low prices.
    Market participants stated that Rusal is looking for alternative sources of membrane-grade caustic soda in Asia, the Middle East and Europe. Previously, Rusal purchased more than 250,000 tons of caustic soda from the US market each year. Due to its large demand, if the company switched to buying caustic soda from European manufacturers, it might cause supply shortage in the entire European caustic soda market.
    A trader stated: “As affected by the US sanctions, Rusal was forced to purchase caustic soda products in the northwestern Europe, the Mediterranean and the Middle East. These regions mainly produce membrane-grade caustic soda, which will tighten the market supply for the diaphragm caustic soda market in the region.” Since March, there have been a large number of caustic soda plant shutdowns in Europe, which will lead to relatively low trading activity in caustic soda in the second quarter of Europe, further tightening the supply of caustic soda in Europe.