Asia'scaustic soda producers need to seek for alternative export destinations withinthe region as traditional market of the west getting limited. There is a sharpdecline of Asia's caustic soda spot prices by over 66% during last 6 months to$130-$160/dmt (dry metric ton). The sharp price decline shows depressing marketconditions.


"The business window to the US is absolutely closed andproducers won't be able to sell there unless they are ready to take big loss."said one producer from Chinese caustic soda market.


There is no strong demand from South America as well, due topressure from domestic market there. In Brazil import prices CFR Santos hit newlows at $90/dmt.


In Western Europe caustic soda demand has been declined by23% YTD as compared to last year. Germany, Italy, Spain feeling the heat andaverage price has been reported between €200 - €300/dmt delivered.


Asian producers have to find alternative market within Asia only, in order to survive, but options are few. China, Japan, South Korea and Taiwan are the biggest caustic soda producers in the world and obviously there is noneed for imports. Australia on an average consumes 2m tonnes of caustic sodaper year because of their alumina industry, but demand has been significantlydeclined due to global economic meltdown.


Only India and South-east Asia can be considered aspotential export market. India's caustic soda import has been ramped up from5,000 tonnes a month to 25.000 tonnes a month for past 2 months and at leastsame amount of cargoes are scheduled to be arrived for next two months.


Spot material had been picked up by Indonesia and Thailand, both of which are having the capacity to be net exporters. Domestic pricesin Southeast Asia are hovering around $200-400/dmt delivered. But these exportalternatives can not compensate the loss arised due to declining Asia-US tradeflow.


Export options in Asia are available to only few players andthat also only till the time some preventive measures would be taken byrespective governments to protect domestic producer's interest. Anti-dumping dutyon various caustic soda producers imposed by India is one live example. Thelocal chlor-alkali association has petitioned for safeguard duties on causticsoda imports. As a result there are already signs of declining buying interestfrom Indian customers.


There are still some potential markets in Asia like Pakistan, Bangladesh, Turkey. Buyers from these places are still keen to make a deal on causticsoda, but subject to cheaper price.


"We are looking to China and Thailand for our futureconsignment, but we are expecting much cheaper price" said one buyer from Pakistan. "In Pakistan price that all matter, not quality." he further commented.One more buyer from Bangladesh confirmed, there is major demand of caustic sodain Bangladesh from textile & dying industries and he is looking for somemanufacturer from China to provide competitive price. He also mentioned, ascaustic soda price in Bangladesh is very volatile at present, so price quote cannot be confirmed. It all depends on the market situation. After considering thesituation it seems that the buyers from Asia are ready to go for the cheapestdeal in the market, so price war is likely not to be over yet.


Africa may be the new export destination, which is a net importer of caustic soda.Many African countries import caustic soda in anhydrous form. But challengesare different there. The region suffers with very poor logistics and many smallcustomers are spread over large geography. But in recent years China succeeded to develop market share here at the cost of traditional European suppliers. TheAfrican market is responsible for 40% of China's anhydrous caustic exports forfirst half of this year.


Some traders are heard to be successful to export causticsoda to China and South Korea which is really unconventional as both of themare net exporters. So, this kind of effort can hardly sustain.


Only a strong recovery in the US economy may help to revive themarket condition.