Citizen Cooling Solutions is a wholesale supplier of (99% NaOH) Caustic Soda Flakes and Caustic Soda Pearls in Nairobi Kenya.
Caustic soda (sodium hydroxide) is a versatile alkali. Its main uses are in the manufacture of pulp and paper, alumina, soap and detergents, petroleum products and chemical production. Other applications include water treatment, food, textiles, metal processing, mining, Tea, Milk, Sugar, Oil, glass making and others. Around three-quarters of end-use demand tracks GDP growth.
One of the largest consumers of caustic soda is the pulp and paper industry where it is used in pulping and bleaching processes, the de-inking of waste paper and water treatment. Global growth is confined to GDP levels.
The production of alumina from bauxite is a major end-use application for caustic soda. Demand has been growing faster than GDP levels driven by the growth in the use of aluminium. While consumption of caustic soda in alumina refining accounts for 11% of global demand, this use consumes more than half of caustic soda globally traded.
Caustic soda is a basic feedstock in the manufacture of a wide range of chemicals. It is used as an intermediate and a reactant in processes that produce solvents, plastics, synthetic fibres, bleach, adhesives, coatings, herbicides, dyes, inks and pharmaceuticals. It is also used to neutralise acidic waste streams and the scrubbing of acidic components from off-gases.
Other uses include the saponification or conversion of fat, tallow and vegetable oils in soap manufacture, and in the manufacture of surfactants for detergents. It is used in the petroleum and natural gas industries to remove acidic materials from hydrocarbons and off-gases. In the textile sector, it is used in the chemical processing of cotton and the dying of synthetic fibres.
World demand for caustic soda was 59m tonnes in 2008, according to US-based consultant CMAI. Pulp and paper was the largest consumer at 14% followed by inorganic chemicals (13%), organic chemicals (12%) and alumina (11%). Other significant end uses include textiles, soaps and detergents, and water treatment.
The supply of caustic soda can be influenced by the chlorine derivatives markets since nearly all caustic soda is co-produced with chlorine by the electrolysis of a sodium chloride solution (1.1 tonne of 100% caustic soda is made for each tonne of chlorine produced). But with these two products consumed in quite different industries, there can be problems in balancing the demand on a chlor-alkali plant.
If caustic soda is in surplus, it can be stored if sufficient capacity is available. But if chlorine is in surplus, it cannot be stored easily and production needs to be cut back if the market for chlorine derivatives is already saturated.
This often leads to a counter cyclicality in the market for the two products, for example, caustic soda becoming increasingly tight and prices escalating while chlorine moves into oversupply and prices collapse. However, if the combined market price of 1.0 tonne of chlorine and 1.1 tonne of caustic soda (often called the electrochemical unit or ECU) is higher than the cost of production, chlor-alkali plants are economically viable.
China drives caustic soda demand
With the major markets in the US, Western Europe and Japan being mature and only growing slowly, China is driving the growth in demand for caustic soda. China is the world’s largest consumer of caustic soda accounting for 28% of world demand and is also the largest producer, overtaking the US in 2005.
Between 2003 and 2008, the net increase in demand has averaged 2m tonnes/year while capacity has grown at an average of 2.5m dry tonnes/year, notes CMAI. Despite capacity increases eclipsing demand, caustic soda prices have seen historically high levels. Caustic soda production is driven by chlorine demand and is not just influenced by capacity availability.
China continues to build capacity with almost 6m dry tonnes/year to be added in 2009-2010, says CMAI. China embarked on a chlor-alkali/vinyls building programme to satisfy the strong growth in PVC demand. Although growth in PVC and caustic has slowed considerably, the capacity continues to increase because the capital investment is well underway.
Although demand for caustic soda had been strong in the US, the fall in consumption in the pulp and paper, alumina and manufacturing industries due to the economic crisis has affected demand. The market for US caustic soda looks grim for 2009 and it is highly likely that North American chlor-alkali producers will curtail production.
There have been changes in global caustic trade patterns due to capacity closures in the US and capacity expansions in the Northeast Asia. The most notable increase has been net exports from Northeast Asia where export volumes have more than doubled since 2003. China has overtaken Japan and Taiwan as the largest exporter with volumes estimated by CMAI to reach 1.5m dry tonnes in 2009.
The US has experienced a 16% decline in net exports between 2003 and 2008 with a further reduction in net exports of 23% by 2013, says CMAI. Most of the increase in net imports to South America has been satisfied by Northeast Asia. Exports from the Middle East are expected to increase by 2013 due to new chlor-alkali capacity in Iran and Saudi Arabia.