Asian Caustic Soda Price enters September on a Bearish Note

In the first week of September 2024, the Caustic Soda market in Asia continued to demonstrate weak performance, with prices remaining steady in some countries. The ongoing decline in the futures market played a key role in shaping the overall market sentiment. Following the downward trend in futures, the spot market faced significant pressure, further strained by an imbalance between supply and demand. Consequently, the Caustic Soda market remained entrenched in its downward trajectory.

In the first week of September 2024, the price of Caustic Soda flakes declined while Caustic Soda Lye remained stagnant in China. Due to pessimistic long-term expectations in the downstream market, driven partly by the seasonal slowdown in household appliances and the substantial pressure on real estate completions, the negative impact on Caustic Soda flake consumption in the Alumina sector has been significant. Additionally, export concerns are mounting, as new tariffs on new energy vehicles are expected to take effect in the second half of the year, while exports are also encountering certain challenges. Additionally, recent rainfall has resulted in a reduction in transportation volumes. Super Typhoon Yagi, named after the Japanese word for 'goat,' caused extensive damage, severely disrupting the transportation of chemicals and petrochemicals from Hainan province and inflicting property losses valued at around 12 billion yuan in southern China.

Heavy rainfall led to widespread flooding and landslides across multiple provinces, forcing the suspension of port operations, trains, and highway services. Experts have described Yagi as the most destructive typhoon to hit Asia.

In Southeast Asia, Caustic Soda market sentiment remained under pressure due to an oversupply of material from China and the ongoing seasonal slowdown. Supply dynamics played a crucial role in influencing buyer decisions. The restocking activity was inconsistent, with buyers opting for lower prices weekly. In response, some producers adjusted their offers to stimulate buying amid the sluggish market conditions.

As a result, Caustic Soda prices declined across Southeast Asia. By the week ending September 6, 2024, the Caustic Soda prices in Indonesia experienced a period of relative stability. Despite the strengthening of local currencies in Southeast Asia, Caustic Soda prices remained on a downward trajectory in US dollar terms.

As per ChemAnalyst, the supply-demand fundamentals for Caustic Soda are anticipated to remain weak, with ample supply and persistent pressure on both sides. The futures market for Caustic Soda has underperformed in recent periods, which has affected confidence in the spot market, leading to an overall bearish outlook. In the short term, the Caustic Soda market is expected to continue fluctuating and consolidating within a set range.