India’s Caustic Soda market has changed dynamically in the third quarter of 2021, owing to the sudden shortage in the supply of Caustic Soda Lye to the downstream consumers. The tight supplies are attributed to the heavy Caustic Soda Lye exports to the USA since mid of August by major companies i.e., Nirma Ltd., Kutch Chemical Industries Ltd., DCM Shriram Ltd. 

The USA is a leading country in chlor-alkali production with major production units located near the gulf coast region. The country has been witnessing disruptions in its production volumes and supply chains since being struck by hurricane Ida last month. Many key players like Olin, Shintec, Formosa Plastics, Oxy Vinyls had to force shut their production units because of heavy damages inflicted by Ida. The production units are still in their revival stage which has led to an acute crunch in caustic soda supply. 

Amidst the operational issues, the USA is forced to rely on imports from Asian countries including India to fulfil its Caustic Soda Lye demand. USA’s loss has become a gain for Indian companies who are exporting major portions of their production volumes to the USA making the Indian market deficient in supplies.

This situation is being reflected in the domestic prices of Caustic Soda Lye that witnessed a sudden jump from INR 27/kg in mid-July to INR 31/kg in mid-August which has further escalated to INR 36/kg of Caustic Soda Lye in mid-September.

Caustic Soda Lye is an alkali metal hydroxide that is widely used in the manufacture of soaps and detergents, paper and pulp, alumina, and industrial chemicals. It serves a wide range of end-user sectors comprising of water treatment, domestic cleaning, textiles, metal processing, glass making, mining etc. 

As per ChemAnalyst, India produces a surplus amount of Caustic Soda Lye that serves many downstream sectors. The demand for Caustic Soda Lye in the Indian market is anticipated to increase with a CAGR of over 5% by 2030. The increasing price of caustic soda is expected to cause an increase in downstream production costs at the company level which could be passed on to the consumers. However, the situation is anticipated to take a reverse turn by the next month with recovering chlor-alkali plant operations in the USA.