US caustic soda contract prices for January remain flat from prices in December 2013 following letdown of proposed US$40/dry short tonne price hike; price increase initiative brought upon by high natural gas prices

LONDON , February 28, 2014 () – US caustic soda contract prices for Jan 2014 stood at a rollover of Dec 2013's prices following the letdown of the proposed $40/dry short tonne price hike. The price increase initiative was brought by high natural gas prices, which has grown around 45% in the past four months. Buyers, however, argued the high natural gas costs may just be temporary. Caustic soda prices currently range at around $515-585/dry short tonne. The initiative was believed to be an action to avoid a drop in caustic soda prices amid waning seasonal demand. Moreover, the supply of caustic soda, as a co-product of chlorine, has also increased due to the expansion of chlor-alkali capacity providing chlorine for downstream vinyls demand. Meanwhile, Westlake will be launching its new 350,000 electrochemical units (ECU)/y chlor-alkali manufacturing facility in Geismar, LA, US, in 1Q 2014. The plant will produce 350,000 tonnes/y of chlorine and 385,000 tonnes/y of caustic soda. An 800,000 ECU facility in Freeport, TX, US, will also be opened by partners Dow Chemical and Mitsui in 1Q 2014. The same amount of capacity, however, will be withdrawn by the firm at an older, less efficient Freeport facility. Producers still continue to push higher prices despite increases in production facilities. Temporary value allowances have been annulled by Dow and OxyChem allowing the firms to initiate price increases without the usual 30-day notice implemented by contracts. A $30 increase is expected by one of the companies in Feb 2014 and the other a $10 hike in Mar 2014.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.