Caustic Soda

Insights into caustic soda usage

• One of the main factors fuelling the growth of caustic soda manufacture is its low cost and wide range of applications. It is mainly the end-user industries that require it the most. For example, it is an important ingredient in the manufacturing process of soaps. The huge demand for it is mainly from the EMEA region.
• The users in this market segment source it from suppliers who can ship the caustic soda in an anhydrous form. This type of caustic soda is light in weight and can be shipped in huge quantities therefore an industry can save on transportation costs. 
• It is a versatile product and comes in several variations. Some are used in heavy manufacturing processes and some are used in smaller quantities as well. However, every type of caustic soda is used somewhere or the other in manufacturing processes.

Global Market Outlook on Caustic Soda

• The global demand is expected to grow at about 2–4 percent CAGR through 2022–2026

• Asia is expected to drive the demand for caustic soda, due to an anticipated increase in the usage of paper, food & beverages, personal care products, and synthetic fibers

• The per-capita consumption of caustic soda is not as saturated in Asia, as it is in the Western markets

Global Market Size: Caustic Soda

• The global caustic soda market is expected to reach $49 Billion by 2025. The key market driving end use is the CPG segment (paper packaging, food & beverage, and personal home care chemicals).

• The global caustic soda market size dropped in 2020, as demand from the largest downstream segment – alumina industry, lowered during the pandemic with a decline in aircraft and automobile manufacturing

• Firm prices and recovery in demand caused a steep uptrend in the caustic soda market for 2021. Higher utility costs for the majority of the year supported a price increase in 2022

• The market is expected to witness a correction from 2023, and hence, prices and market size are expected to drop in 2023

Global Demand by Application

S&D&T is a strategic segment in the eyes of caustic soda suppliers, the overall volume from individual buyers of the CPG segment would be perceived as small-scale buyers in the fragmented market.

Downstream Demand Outlook

• The top three major demand-driving segments:

−Organic and inorganic chemicals: 1-2 percent CAGR

−S&D&T: 2-3 percent CAGR

−Pulp & paper: 3-4 percent CAGR

• Co-product downstream demand could impact the caustic soda market supply

−Globally, close to 60 percent of chlroine is used in PVC production

−The usage of PVC has been decreasing in the US and Europe, due to sustainabilty and evironmental concerns

−A complete reduction of PVC usage for daily use and food pacakging materials is likely to curb chlorine production, thereby resulting in the reduction of caustic supply

Caustic Soda Industry Drivers and Constraints

Drivers

Demand driving segment

• The chemical industry accounted for 27–30 percent of the global demand in 2021

• By 2024, the chemicals segment (organic and inorganic) is expected to remain the largest end-user, amounting to 30–32 percent of the demand, followed by S&D&T (15 percent) and alumina (14–15 percent)

Demand-driving region

• Northeast Asia was the major consumer of caustic soda (50 percent) in 2018, followed by Europe (18 percent) and the US (17 percent)

• With high growth of the paper & pulp industry in China and LA, the demand share of North East Asia is expected to increase to 55 percent, followed by the US (15 percent) and Europe (14 percent)

Constraints

High cost of investment

• Investment in membrane technology is as high as $100 million for a 100,000 DMT/year plant, which can have an ROI period of 8–10 years, and hence is a major entry barrier for new players

• Energy-intensive operations, and hence, low profit margin to the manufacturers and environmental impact of carbon emission also a constraint for the caustic soda market growth

Recession and devaluation of Argentinian Peso

• Argentina is experiencing recession, as the economy shrank by 4 percent and 3.5 percent during Q2 and Q3 2018, respectively, against the same period in 2017, which has increased inflation and devalued Argentina’s peso, which is hindering the market growth

Co-product dynamics

• The market growth for caustic soda is highly dependent on the chlorine market dynamics

• A low growth of 2–3 percent (the global chlorine market) will be a hindrance to caustic soda production

• In Europe, PVC usage on regularly used plastic, like toys and food packaging, has been banned, which will hinder caustic soda production

• PVC is a major downstream for chlorine, insufficient chlorine management techniques will affect caustic soda production rate

Caustic Soda Cost Structure Analysis

• Chlor-alkali production is an energy-intensive process, which requires huge amount of electricity (approx. 2,600 Kwh in membrane technology). Hence, utility cost is the major cost driver, rather than raw material costs, unlike other manufacturing processes. Players in the US and the Middle East have an edge over manufacturers from other regions.

• Low-cost electricity produced from shale gas has turned the US into a low-cost production region (50 percent of the total cost), compared to LA, where it is extremely high (65 percent of total cost)

• China is the second cost-effective country, due to its recent slash down in coal prices, which is the Industry source of electricity in the region. Also, labor costs are relatively lower, compared to other regions

• In most regions, electricity prices are government regulated and are seldom volatile

• Raw material is mainly salt, which has very low impact on the final cost (10 percent price increase in salt would translate to approx. 1 percent increase in the caustic soda cost)

• Buyers should be vary of the seasonal pattern of the demand, in order to track the prices, rather than cost parameters

Why Buy This Report

With this caustic soda procurement and research report, you get: 

• Market share analyses at regional and country level 

• Market data for 2019, 2020, till 2024

• Market trends (drivers, restraints, opportunities, challenges, recommendations, and investment opportunities)

• Strategic recommendations for the new market entrants

• Strategic recommendations in key business segments based on the market estimations

• Caustic soda price and supply chain trends outlining the latest technological advancements

• Competitive scenario sizing up the major common trends

• Profiles of caustic soda suppliers with detailed financials, strategies, and latest developments