Two US chlor-alkali producers announce caustic soda price increases: letters

Houston — Two US chlor-alkali producers this week announced domestic caustic soda price increases, according to customer letters obtained by S&P Global Platts.

Olin, the world's largest chlor-alkali producer, said in a letter dated February 12 that it would raise caustic soda prices by $30/dst in the US and C$45/mt in Canada.

Westlake Chemical said in a letter also dated February 12 that it would raise prices by $40/dst in the US and by C$45/mt in Canada. Westlake also announced a chlorine price increase on Friday of $35/st in the US and C$51/mt in Canada, according to a letter to customers obtained by Platts.

Both were to be effective immediately or as contract terms permit. If accepted, such increases can take up to a quarter to appear in contracts, per market feedback.

Last November, several producers announced price increases ranging from $80/dst to $85/dst, but market sources said those increases were rejected.

Most producers announced price increases for domestic caustic soda in August and September in a $30-$45/dst range, but the market rejected those hikes as well, according to sources. That rejection came after the market accepted less than half of US increases ranging from $60-$90/dst announced in May and June.

Caustic soda prices were under pressure globally throughout 2019 as economic slowdowns in China and Europe and more widespread industrial slowdowns siphoned demand in key sectors.

Olin last week reported a $77.2 million loss for the fourth quarter of 2019, citing sharp demand reductions from alumina, pulp and paper, refrigerant, agricultural and urethane customers. Caustic soda is a key feedstock for both alumina and pulp and paper industries.

US export caustic soda prices have hovered at $200/mt FOB USG, the lowest level since February 2010, when prices were crawling back from the global financial crisis.

"We do expect the weak underlying demand fundamentals in our chemical businesses to persist through at least the first quarter of 2020," Olin CEO John Fischer said during the company's quarterly earnings call last week.

A market source said the price increases had little chance of acceptance in the market, given current price pressure. Westlake will announce Q4 results on Tuesday, at which time executives are expected to discuss their 2020 outlook for caustic soda markets.