Caustic Soda Prices on the Rise: Demand Surges from Paper and Alumina Sectors

Key Highlights

• Price Surge: Caustic Soda Flakes prices rose by ₹0.5/kg, while Lye prices increased by ₹1/kg, driven by strong demand from the paper and aluminum sectors.
• Demand Dynamics: Robust demand is observed in pulp & paper, textiles, and soap industries, while the pharma sector reports weaker production and reduced consumption.
• Supply Constraints: Domestic manufacturers are operating at reduced production rates, leading to tight local supply.
• Industry Update: GACL-NALCO is setting up a 266,670 TPA caustic soda plant in Gujarat, strengthening supply for alumina facilities.

Chemical Price: Indian Market Sees Uptick in Caustic Soda Prices

• The cost of Caustic Soda Flakes in the local market has seen a slight increase of ₹0.5/kg today. Below are the current prices and terms offered by various domestic manufacturers through their authorized dealers:
• TGV Make CS Flakes: ₹47.50/kg ++, Ex Kurnool (advance payment terms)
• GACL Make CS Flakes: ₹46.50/kg ++, Ex Dahej
• Andhra Sugar Make CS Flakes: ₹48.00/kg ++, Ex Rajahmundry (advance payment terms)
• Grasim Industries: ₹48.00/kg ++, Ex Kakinada (advance payment terms)
• Chemplast Sanmar: ₹47.00/kg ++, Ex Karaikal, Tamil Nadu (advance payment terms)
• In the western region, manufacturers like GACL, DCM Shriram, and Meghmani have set their CS flake prices between ₹46.50-48.00/kg ++, depending on geographic location and territory.
• Meanwhile, the price of Caustic Soda Lye has also increased by ₹1/kg, with the updated rates as follows:
• Ex Dahej: ₹41.50/kg ++
• Ex Hyderabad: ₹44.00/kg ++
• Ex Chennai: ₹42.00/kg ++
• All the prices are based on advance payment terms.
• The current surge in caustic soda prices is attributed to the rising demand from paper and aluminum manufacturers.

Chemical Demand Grows Across Key Downstream Industries

• Local supply remains constrained due to reduced production rates by most manufacturers. However, downstream industries such as pulp and paper, aluminum, textile processing, and soap and detergent production have shown a notable uptick in demand, driven by improved production rates.
• On the other hand, the bulk drug sector is witnessing a decline in demand, impacted by weaker production rates.
• The dyestuffs industry has shown marginal improvement in November 2024 and is expected to remain strong through December, according to a leading dyestuff manufacturer.
• India’s total monthly demand for CS Flakes and Lye stands at approximately 334 kt, distributed across industries as follows:
• Chemical Manufacturers: ~94 kt/month
• Soap and Detergent Manufacturers: ~61 kt/month
• Paper and Pulp Industries: ~51 kt/month
• Alumina Industries: ~34 kt/month
• Other Downstream Industries (food breweries, textile processing, dyestuffs, etc.): ~96 kt/month

Market News: International Energy Prices Surge, Adding to Market Volatility

• In the international market, the Crude Oil Benchmark WTI prices have increased by 0.52%, reaching $67.55 per barrel, while natural gas prices have risen significantly by 4.37% to $3.21.
• In India, GACL-NALCO Alkalies and Chemicals Private Limited (GNAL), a joint venture between Gujarat Alkalies and Chemicals Limited (GACL) and National Aluminium Company Limited (NALCO), is setting up a 266,670 TPA caustic soda plant along with a 130 MW coal-based captive power plant in Dahej, Gujarat.
• With a 60:40 equity holding ratio, this partnership aims to strengthen GACL’s leadership in the chlor-alkali sector while ensuring a steady supply of caustic soda to NALCO’s alumina facilities.

Expert Opinion: Price Outlook for Caustic Soda

The prices of Caustic Soda Flakes and Lye are expected to remain firm in the coming days, driven by a reduced production rate among domestic manufacturers and robust demand from the paper and alumina sectors. However, the ongoing slowdown in the pharma industry is likely to exert a stabilizing effect, keeping prices steady to neutral.