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Caustic soda market weakens as its demand fails to keep up with chlorine.
THE CHLORALKALI industry is again falling out of phase, with pricing for chlorine on the rise and caustic dropping monthly. A surge in chlorine demand has caused producers to nominate price increases, but the caustic soda market is unable to keep up. Caustic prices have weakened progressively and are threatening to offset much of the gains for the electrochemical unit (ECU). The industry is looking to seasonal production curtailments to tighten up caustic and relieve the pressure on it.
Efforts to raise chlorine prices are being led by OxyChem, which nominated a $30-per-ton increase in the US, and Olin Corporation, which also nominated $30 per ton in the US, as well as C$48 per metric ton in Canada, to take effect immediately. Vulcan Chemical is raising its prices by $30 per net ton, effective July 1, and Dow Chemical is also raising chlorine prices by $30 per short ton.
"Chlorine demand has been pressed on by strong demand for chlorine derivatives, particularly PVC. EDC, VCM, urethanes and titanium dioxide are also contributing to growth," says Jon Thorstenson, director of marketing for chlorine at Olin Chlor/Alkali. An increase in construction, aided by the healthy US economy and a mild winter, has driven up the use of chlorine derivatives.
Although chlorine demand has surged and its prices continue to strengthen, caustic soda has faced a corresponding weakening in prices. Spot prices for caustic have fallen steadily since reaching a high in January of $120 to $150 per ton. Initially, the February drop to $110 to $120 per ton was attributed to year 2000 buildups being worked down. But prices have continued...