Australian caustic soda buyers are currently opting for minimum contractual quantity from Asia producers and are buying US spot cargoes due to high prices in Asia, industry sources said Wednesday.
"US caustic soda prices are much lower and buyers in Australia have opted to take the minimum contractual volume from Asian producers and are buying some spot cargoes from the US," a Northeast Asian source said.
US export prices gained $5/mt week on week Tuesday to be assessed at $375/mt FOB USG.
Meanwhile, caustic soda prices in Asia edged up $2/mt week on week Tuesday to be assessed at $485/mt FOB Northeast Asia.
Market sources said they are seeing more cargoes from US move to Australia.
The typical size of caustic soda cargoes from US are 40,000 mt. The freight from USG to Australia for 40,000 mt cargoes was quoted in the mid-$40/mt, according to ship brokers.
In the chlor-alkali process, chlorine and caustic soda are produced in a fixed ratio by the electrolysis of sodium chloride. Production is measured in ECUs, or electrochemical units, consisting of 1 mt of chlorine, 1.13 mt of caustic soda, and 0.03 mt of hydrogen.
The US caustic soda prices were more competitive than those from Asian manufacturers due to lower electricity cost, which is around 50% of the production cost. The ECU cost of caustic soda in US was heard at around $200/ECU versus $350-400/ECU in Asia.
"The US caustic soda price is very competitive. With the increase in demand from Australia I think US caustic [soda] prices are going to be firmer," said a Northeast Asian source.
