Caustic Soda Prices Surge in July as Hurricane Beryl Disrupts Supply Chains

The Caustic Soda prices in the US market increased in the second half of July 2024, driven by reduced production rates and higher selling costs in the export market. Limited inventories and a shortage of containers, coupled with slowed production rates, contributed to the price surge. Hurricane Beryl has halted industrial Caustic Soda production in the USA, along with floods disrupting downstream demand in the Alumina sector. Imports of US-origin Caustic Soda are gaining traction in the North American market, with US producers maintaining strong pricing due to reduced domestic supplies and high local prices in recent weeks.

From the supply chain perspective, Liquid chemical tanker rates from the US Gulf to Asia have seen a sharp decline this week, as plant shutdowns and delays in the aftermath of Hurricane Beryl have created significant gaps in shipping capacity, according to shipping brokers. Hurricane Beryl made landfall in Texas on July 8, between Corpus Christi and Houston, a crucial area for US petrochemical production. In anticipation of the storm, some Caustic Soda-producing plants took precautionary measures and shut down, while others sustained damage or lost power, leading to further shutdowns and declarations of force majeure.

In the Caustic Soda market, US-based chlor-alkali producer Olin declared a force majeure on July 10 for its Freeport, Texas, plant following significant damage caused by Hurricane Beryl. The company stated that the force majeure affects all chlor-alkali and derivative vinyl products produced at the site. Olin reported difficulties in accessing power, raw materials, feedstocks, and other essential services, which have made logistics and production management challenging. Olin is currently carrying out a comprehensive inspection and assessment of its facility, however, there is no timeline for resolving the outage. The impact of Hurricane Beryl, which made landfall on July 8, has led to widespread disruptions in the region, affecting numerous industries and their operations including the Caustic Soda market.

These outages and delays in the Caustic Soda production units have left sellers without contract cargoes, which resulted in the price increase for the product. This trend is expected to persist for the next week or two.  Additionally, rates have softened this week along the USG-Brazil trade lane due to the availability of partial space. The uncertainty caused by Beryl has resulted in a “wait and see” approach among Caustic Soda players on this trade lane.

The impact of Hurricane Beryl continues to reverberate through the shipping industry, creating an unpredictable market landscape for liquid chemical tankers including Caustic Soda.

As per ChemAnalyst, Caustic Soda prices in the US market are expected to increase in August 2024, driven by reduced production rates and higher selling costs in the export market. Limited inventories and a shortage of containers, combined with slowed production rates, may contribute to the price surge. Hurricane Beryl is likely to affect the Caustic Soda production in the USA, with floods further disrupting downstream demand in the alumina sector.