Caustic Soda Market Intelligence

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COVID 19 impact on Caustic Soda market

  • Increase in demand for hand wash and soaps due to the Coronavirus outbreak to weigh on chlor-alkali demand.
  • The Coronavirus outbreak in Italy, Spain, UK, Germany and other European countries will lower manufacturing activities and demand for caustic soda will witness downtrend in the coming months
  • Countrywide lockdown in India will also impact caustic soda market. India is a major importer of caustic soda from Japan and the lockdown will lower consumption and imports in the country.

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Are you looking for answers on Caustic Soda category?

Are you looking for answers on Caustic Soda category?

  • What are the key trends in Caustic Soda category?
  • Am I paying the right price?
  • Am I working with the right supplier?
  • What are the major challenges and risks in Caustic Soda industry?
  • How is Caustic Soda industry performing?

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Report Coverage

  • Key cost elements and Drivers
  • Caustic Soda Pricing
  • PESTLE Analysis – India
  • SWOT Analysis – DCM Shriram

Table of contents

  1. Insights
  1. Caustic Soda Market Dynamics - India
  1. Caustic Soda Market Size - India
  1. Caustic Soda Market Segmentation
  1. Growth Drivers and Constraints
  1. Caustic Soda Trade Dynamics
  1. Caustic Soda Supplier Landscape
  1. Caustic Soda Pricing
  1. Caustic Soda Key cost elements and Drivers
  1. Caustic Soda PESTLE Analysis
  1. PORTER’s Five Forces analysis
  1. SWOT Analysis - Top four players in the market
  1. India - GDP & PMI
  1. India - Political and Structural Scenario
  1. India - Inflation & labor Wages

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Regional Market Outlook on Caustic Soda

India's caustic soda installed capacity is expected to reach 4 MMT in 2018-2019 due to capacity expansions by players like Grasim Industries and DCM Shriram. The demand growth slowed down during 2016-2017 due to demonetization in India during November 2016. The demand is expected to grow by 4-5 percent in the forecast period.

  • Higher Operating Rates: To cater to the increasing domestic demand, Indian producers are expanding capacities and also operating existing capacities at higher rates of about 85-95 percent
  • Grasim Industries (part of Aditya Birla Group) has increased caustic soda capacity by 67 percent to 356,000 tons/year. The increased capacity is anticipated to be easily absorbed by the domestic market due to strong demand from downstream alumina and textile sectors

Insights

Multiple Sourcing:

  • Buyers can engage in multiple sourcing from domestic as well as international suppliers so as to lower the risk of price volatility and secure supplies
  • Japan is the biggest importer of caustic soda to India, so sourcing from Japan can be considered due to established trade routes. However, logistics cost and import duties have to be considered while engaging with multiple sources

Increasing capacities in India:

  • Grasim Industries (part of Aditya Birla Group) has increased caustic soda capacity by 67 percent to 356,000 tons/year
  • Nalco and GACL are also expected to bring 267,000 tons/year plant in Dahej by 2020 which will improve domestic supply

Demand growth in India

  • Growth of textile industry in India which is expected to reach $230 billion by 2020 will fuel demand growth of caustic soda in India
  • Growth in automobile industry/car sales in India will improve demand for aluminum and in turn support growth of caustic soda demand from alumina smelting

Market Segmentation

Caustic soda market can be segmented based on type of caustic soda and the end-use application

Based on Type: Caustic soda market can be segmented into lye and flakes. Caustic soda lye is a solution of caustic soda and water. The percentage of caustic soda in lye usually ranges between 32-50 percent based on application.
Caustic soda flakes are anhydrous caustic soda, with about 99-99.9 percent caustic soda.

Based on Application: During 2017, the textile industry was the biggest consumer of caustic soda followed by alumina smelting and pulp and paper

  • During 2017, caustic soda consumption from organic and inorganic chemical formulations formed about 21 percent of the overall demand
  • Other applications of caustic soda include, soaps and detergent industry, water treatment and dyes and inks among others

Growth Drivers and Constraints

Drivers

Growth from Applications:

  • Textile industry is the biggest consumer of caustic soda in India and makes up for about 20 percent of the domestic demand
  • Growth of textile industry in India which is expected to reach $230 billion by 2020 will fuel demand growth of caustic soda in India
  • Growth in automobile industry/car sales in India will improve demand for aluminum and in turn support growth of caustic soda demand from alumina smelting

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
  • Indian manufacturers face fierce competition from imported caustic soda, which is cheaper compared to the domestic produce. This is due to high input and logistics costs within the country

Co–product dynamics  

  • The market growth for caustic soda is highly dependent on the chlorine market dynamics
  • In H1 2018, chlorine prices hovered around negative range in India, where producer had to pay the buyer for chlorine
  • Chlorine market is expected to grow with growth in vinyl segment with the demand for PVC in India

Caustic Soda Market Frequently Asked Questions

  1. What will be the possible market valuation of the caustic soda market?
  2. As of 2018, the global caustic soda market was valued at approximately $36 billion and is expected to reach $55.8 billion by 2026.

 

  1. How are the major players contributing to the caustic soda market in India?
  2. The domestic demand for caustic soda is increasing, and Indian producers are expanding capacities and operating existing capacities at higher rates to cater to these demands. Grasim Industries, a part of Aditya Birla Group, has increased caustic soda capacity by 67 percent to 356,000 tons per year. Nalco and GACL will further improve the domestic supply by contributing around 267,000 tons per year by 2020.

 

  1. What are the factors expected to drive the demand growth of the caustic soda market in India?
  2. One of the major factors, as pointed out from Beroe’s caustic soda market report, that will drive the growth of the market, is the expansion of the textile industry in India valued at approximately $230 billion. In addition, the growth of automobile industry/ car sales in India will also drive the demand for caustic soda for alumina smelting.

 

  1. Are there any constraints to growth that the caustic soda market may be facing?
  2. Firstly, there is a high cost of investment associated with the caustic soda market. The investment required for membrane technology can go as high as $100 million for a 100,000 DMT/ year plant that can have an ROI period of 8-10 years. Secondly, caustic soda market analysis shows that Indian producers have to face tough competition from imported caustic soda, which is cheaper than the domestic produce owing to the high input and logistics costs within the country.

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