Sector Spotlight: Textiles, Paper, and Alumina Propel Caustic Soda Demand

Key Highlights:

• Price Updates: Caustic Soda Flakes now range from ₹36.50 to ₹49.50/kg depending on region and make; Caustic Soda Lye prices increased by ₹1/kg across India.
• Demand Drivers: Textiles, paper, and aluminum industries show robust demand, while bulk drugs see a decline; India’s monthly demand is ~334 kt.
• Global Developments: WTI crude oil prices rose 0.27%; LAB capacity expansion announced by Tamilnadu Petroproducts Ltd. at ₹405 crore.
• Expert Outlook: Prices are likely to remain stable, with strong demand balancing reduced supply and weaker pharmaceutical sector activity.

Chemicals Price: Caustic Soda Market Sees Marginal Price Rise

• The local market for Caustic Soda Flakes experienced a slight price increase of ₹0.5/kg today. Below are the latest prices and terms from various domestic manufacturers through their authorized dealers:
  TGV Make CS Flakes: ₹48.50/kg ++, Ex Kurnool (advance payment terms)
  GACL Make CS Flakes: ₹47.50/kg ++, Ex Dahej
  Andhra Sugar Make CS Flakes: ₹49.50/kg ++, Ex Rajahmundry (advance payment terms)
  Grasim Industries: ₹48.50/kg ++, Ex Kakinada (advance payment terms)
  Chemplast Sanmar: ₹48.00/kg ++, Ex Karaikal, Tamil Nadu (advance payment terms)
• In the western region, manufacturers such as DCM Shriram and Meghmani have set their CS Flake prices in the range of ₹36.50-₹37.50/kg ++, depending on geographic location and territory.
• Additionally, the price of Caustic Soda Lye increased by ₹1/kg. The updated rates are as follows:
  Ex Dahej: ₹42.50/kg ++
  Ex Hyderabad: ₹45.00/kg ++
  Ex Chennai: ₹43.00/kg ++
• All prices are based on advance payment terms.
• The recent uptick in caustic soda prices is primarily attributed to heightened demand from key sectors such as textiles, paper, and aluminum manufacturing.

Chemicals Demand and Supply: Growth in Key Sectors Fuels Price Uptick

• 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 increase in demand, driven by improved operational efficiencies.
• Conversely, the bulk drug sector is witnessing a downturn in demand, influenced by weaker production rates.
• The dyestuff industry reported marginal improvements in November 2024 and is projected to remain strong throughout December, as per insights from a leading dyestuff manufacturer.
• India’s total monthly demand for CS Flakes and Lye stands at approximately 334 kt, distributed 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 (including food breweries, textile processing, dyestuffs, etc.): ~96 kt/month

Market News: Global Chemical Industry Updates and Impacts

• On the international front, the Crude Oil Benchmark WTI prices rose by 0.27% to reach $69.83 per barrel, while natural gas prices saw a significant increase of 3.25%, reaching $3.42.
• Tamilnadu Petroproducts Ltd. (TPL) has announced plans to expand the capacity of its Linear Alkyl Benzene (LAB) plant from 120,000 tonnes per annum (TPA) to 145,000 TPA by FY26. The expansion project is estimated to cost ₹405 crore.
• Chiyuan Chemical has restarted its BDO Unit. The Unit is located in China with a production capacity of 60,000 Tons/Year.
• Sichuan Tianhua has shut down its BDO Unit for maintenance work. The Unit is located in Sichuan, China with a production capacity of 85,000 Tons/Year.
• Sinopec has reduced its domestic Benzene list Prices in China by CNY 150/MT and assessed at CNY 7,350/MT, EXW basis.

Expert Opinion: Price Stability Amid Mixed Sectoral Demand

Caustic Soda Flakes and Lye prices are anticipated to remain firm in the near term, driven by constrained production rates among domestic manufacturers and strong demand from the paper and alumina sectors. However, the ongoing slowdown in the pharmaceutical industry may provide a stabilizing effect, keeping prices steady to neutral.