European caustic soda demand remains unchanged as soap product output rises

Use of chlor-alkali products for soap production, among other applications, has remained firm in Europe, industry body Eurochlor reported Monday, citing hand washing amid the continued spread of coronavirus in the region as being a key factor.

"A key chlor-alkali product in making soap is sodium hydroxide, otherwise known as 'lye'. Potassium hydroxide, another key chlor-alkali chemical, is often used to make liquid soaps," Eurochlor said.

In addition to soap production, sodium hydroxide is widely used to manufacture a variety of detergents used in homes and commercial applications, while chlorine bleach is produced also by combining chlorine and sodium hydroxide.

Despite this, demand for caustic soda globally has generally been lackluster since 2019, with the coronavirus outbreak adding considerable uncertainties.

While caustic soda is used in the manufacturing of soaps and detergents, this is a very small part of the overall market, representing only around 6%, with the larger consumer markets being alumina at 17% and pulp and paper at 11%.

"The current situation is bearish as more and more industrial production shuts down outside of China," a S&P Global Platts Analytics said.

European caustic soda sources said this week that, while there may be supply constraints in the region due to chlor-alkali plant maintenance in Northwest Europe, market fundamentals remain weak, and may again worsen following the recent plunge in crude oil.

"Regardless of the raw materials prices, if demand is not there, industry will retreat from buying. So it affects demand in a big way," one source said.

S&P Global last assessed European caustic soda prices Tuesday at $210/mt FOB Rotterdam, stable week on week. Caustic soda spot prices stood at $230-$240/mt FOB USG and $249-$251/mt FOB NE Asia, Platts data showed also March 12.