European Sodium Hypochlorite Prices Remain Subdued in May, to stabilize in June 2024

Hamburg (Germany): Sodium Hypochlorite prices have shown weak trend in May 2024 as the downturn persisted throughout the Chlor-Alkali industry, with production of Caustic Soda and Chlorine in Europe recording abysmal operating rates of below 55% in May 2024. The situation was particularly drastic in multiple countries like Belgium, the Netherlands, and Germany, where flooding in the Rhine Valley halted operations across multiple units. Sodium Hypochlorite is primarily used for wastewater treatment in ETF and to supply clean drinking water to residential and commercial establishments.

European markets have been experiencing a bearish stance for the past four months due to lower seasonal demand and an influx of cheaper Sodium Hypochlorite inventory from Asia and Norway. Domestic supply of Sodium Hypochlorite remained constrained due to high costs of gas and electricity. ChemAnalyst conducted investigations into the cost structure of Sodium Hypochlorite for European markets in the first quarter of 2024. The study revealed that high gas prices and heating oil requirements significantly raised the input costs of chlorine production from Brine in Europe, ranging from EUR 175/MT to EUR 200/MT, which accounted for more than 70% of Sodium Hypochlorite costs. This squeezed margins to as low as -15/MT for certain establishments, with market prices of Sodium Hypochlorite subdued around USD 280/MT to USD 310/MT. Logistic challenges, including labor strikes in Germany, further increased costs by USD 15 to USD 20 per ton. One market participant noted that delivery costs from Hamburg to Koeln were expected to exceed those from Norway to Hamburg.

From a supply perspective, ChemAnalyst assessed CFR Hamburg prices for deliveries from Norway at USD 215 to USD 230 per ton of Sodium Hypochlorite, while FD Antwerp prices for Sodium Hypochlorite 12% were around USD 275 to USD 280 per ton, higher than current import offers. Despite this, Chinese deliveries of Sodium Hypochlorite 12% to Northern Europe were assessed at USD 200/MT, remaining competitive despite high freight charges. Gas prices at TTF Dutch skyrocketed to EUR 26.3/MWh to 35.6/MWh, pushing spread margins into negative territory and prompting Nobian, a major Sodium Hypochlorite supplier in Germany, to declare force majeure strategically to maintain profitability.

A market participant, identified as a financial expert, revealed that many midcap chemical producers in Europe were facing bad debt issues, prompting them to reduce operations to stabilize their balance sheets amidst weaker margins. European Chlor-Alkali suppliers and Sodium Hypochlorite pricing strategists have urged the EU Commission to consider banning imports from Asia, Norway, and North Africa, which they deem detrimental to Northwestern Europe's production.

ChemAnalyst forecasts that Sodium Hypochlorite prices will bottom out in June 2024, citing easing crude and gas spot prices in May. Conversely, demand is expected to improve as manufacturing across European regions recovers, with municipal demand for water intensifying as summer heat arrives in Europe. Business confidence in Sodium Hypochlorite remains neutral as other market players express concerns about high inventory stocks in the distribution channel and strong competition from imports.