Caustic Soda prices tumbled in China amid lower buying momentum from the downstream Alumina industry

Caustic Soda prices in China witnessed a marginal decline in the week ending 4th March amidst the dullness in the demand from the Alumina Industry. Caustic Soda prices showcased a continuous upward trajectory since late January in lieu of the decline in the output due to a spate of temporary outages in the Spring Festival.

The sudden fall in its prices is likely to be an outcome of the reduced usage of Caustic Soda in the Alumina Industry. Earlier Caustic Soda was viably used for Alumina reefing due to the high presence of Bauxite. As Bauxite contains a high number of Silicon Dioxide, because of this the high amount of Caustic Soda is required during the refining process. However, as China has gradually reduced the share of Bauxite in Alumina Refinery, consumption of Caustic Soda has declined in the Alumina industry, despite its increased production.

It has been heard that Alumina refining has reached a significant high since December. Besides, new refining capacities are expected to be added to the Alumina industry in China by the end of Q1. However, export demand for Alumina has remained low while in the domestic market traders have been heard sidelining purchases under expectations of a further drop in its prices. Taking cues from bearish buying activities, Alumina prices have also turned dull in China.

Caustic Soda FOB, as well as domestic prices, have witnessed a fall of nearly 1.5% in China. As per ChemAnalyst. “As Caustic Soda industries are currently operating at high rates, supply of the product is expected to overpower its demand in the coming timeframe extending a downward pressure upon its prices.”