OxyChem announces caustic soda price increase

Houston — OxyChem, the chemical division of Occidental Petroleum, has announced a $40/dst caustic soda price increase this week, according to a letter to customers seen by S&P Global Platts.

OxyChem's letter, dated Tuesday, came after Olin, the world's largest chlor-alkali producer, and Westlake Chemical announced similar US caustic soda price increases last week, ranging from $30-$40/dst.

All the increases were effective immediately or as contracts permit, according to the customer letters. If accepted, such increases can take up to 90 days to appear in contracts, per market feedback.

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

Olin earlier this month 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.

On Tuesday Westlake reported a 41% drop in fourth-quarter net income on lower demand and global economic uncertainties, highlighted by weaker caustic soda pricing.

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.

Market sources were skeptical that the latest caustic soda price increases would be accepted.

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.