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Formosa among caustic soda producers seeking higher prices

Houston — Formosa Plastics this week was the latest US chlor-alkali producer to announce higher caustic soda prices, according to a letter to customers obtained by S&P Global Platts.

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The letter, dated Wednesday, announced a price increase of $60/dst on all liquid caustic soda products, "effective immediately or as contract terms permit," which is typical of such price hike announcements.

Olin and OxyChem, the chemical division of Occidental Petroleum, last week announced North American caustic soda price increases as well, according to customer letters.

OxyChem said it would raise prices by $90/dst in the US and C$100/mt in Canada, while Olin announced increases of $60/dst in the US and C$75/mt in Canada.

The increases came as demand in Brazil, the top export market for US caustic soda, is rising. Last week Norwegian chemical producer Norsk Hydro announced the second of two embargoes limiting production at its 6.3 million mt/year Alunorte alumina refinery in Brazil - the world's largest - had been lifted, opening the door to ramping up output to 75%-85% of capacity in two months. Those embargoes had limited Alunorte's output to 50% in capacity since March 2018, after heavy February 2018 rain generated concerns about contamination leaks.

In addition, Brazilian petrochemical producer Braskem has been increasing its caustic soda imports after shutting chlor-alkali and ethylene dichloride plants in Alagoas after a government report released May 8 linked the company's salt mining operations to geological damage in that area. Braskem also ceased salt mining, though the company is in talks with regulators to possibly resume salt mining elsewhere in Alagoas, which would allow the shut plants to restart.

Alunorte's rate cut helped push US export caustic soda prices to $320/mt FOB USG, its lowest level since September 6, 2016, according to S&P Global Platts data.

Market sources said that increased Brazilian demand could boost prices, but increases may not be dramatic if the companies have volume discounts.

-- Kristen Hays, kristen.hays@spglobal.com

-- Edited by Derek Sands, newsdesk@spglobal.com