Chlorine, Caustic Soda Supply tight in South America Amid Production Constraints in USA

The supply of Chlor Alkali products is short in South America which is has caused subsequent price rise for Caustic Soda price and Chlorine in countries like Argentina, Brazil, and Columbia. Chlorine Prices have risen to almost 20% in South America in the past month. With most of the demand met through the imports from North America, the supply crunch in USA has triggered the present situation.

OxyChem, the chemical division of Occidental Petroleum has declared force majeure on Chlorine and Caustic Soda in the aftermath of Hurricane Ida’s impact on Louisiana. This had an impact on the supply of Chlorine and Caustic Soda in the USA.

Apart from companies like OxyChem, several other companies have closed down operations post-Ida.

Chlorine is a product of the chlor alkali process and the demand for chlorine has been rising at a healthy rate due to increase in the demand of water treatment, and Poly vinyl Chloride pricing (PVC) and Ethylene Di Chloride (EDC). The global demand for chlorine stood at around 100 million tonnes in 2020 which is expected to grow at a CAGR of 3.5% in the coming years.

Caustic Soda is also a product of chlor alkali process. The global demand for caustic soda stood at around 85 million tonnes in 2020 and is expected to rise at a CAGR of 5.4%. The major applications for caustic soda include pulp and paper, soap and detergent, water treatment, textile etc.

As per ChemAnanlyst, “the supply pressure for Chlorine and Caustic Soda in South America is not reducing until the effects of Ida related supply crunch in USA ease. Once the companies restart production in North America and the supply returns to normal the prices will tend to stabilize.”