Caustic soda producers in China are starting to turn to exports as domestic demand remains weak, market sources told SSESSMENTS.COM. However, only a few of them are able to export, the sources added. Traders and buyers are struggling to get vessels for US west coast destination due to a 14-day quarantine required for ships with the last port of call in a Chinese port.
At the same time, Many chlor alkali producers shut their plants or reduced operating rates amid mounting inventory pressure due to slower downstream demand. Producers in Shandong, Hubei, and Anhui have shut roughly 1.5 million dry tons/year of chlor alkali production capacity. Total operating rates in east China and Shandong are estimated to have fallen to 55%-65%.
Demand for caustic soda signaled some improvements last week, but it remained weak. Some cities have eased travel restrictions, and cargo deliveries have become smoother. However, downstream producers have not recovered fully. Average alumina and rayon production rates fell to 75% and 70%, respectively, last week.
The production cuts have helped to stabilize caustic soda prices in China. The most recent contract prices to alumina producers were steady at CNY1,720/dry ton, ($245/dry ton). Liquid chlorine prices in Shandong and north China were also stable at CNY100-300/ton ($14-$43/ton) ex-plant.
