Caustic Soda Market Size

Caustic Soda Market Size

Caustic Soda Market size was USD 30.27 billion in 2019 and will grow at a CAGR of 3.6% from 2020 to 2026. Indispensable product demand in pulp & paper and water treatment sector will complement the industry size by 2026.

Caustic soda is an inorganic compound which is used in various end use industries due to its strong alkaline property. It has outstanding ability to dissolve or extract, thus it is majorly used in paper & pulp and alumina sector. The product is also heavily used as a feedstock for production of large number of chemicals.

Furthermore, in sodium-based chemistry, it acts as reagent which delivers sodium to the final end use products. Thus, the product is used in the production of silicates, silicas, metasilicates fibres and cleaning products such as bleach, detergents and soaps.

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The Covid-19 have had substantial impact on global caustic soda market and its value chain. The pressing effects of the Covid-19 pandemic was demand shock and massive disruptions in global supply chains. However, impact of product demand by end user industry was varied across industries and timeline. For instance, caustic soda manufacturers witnessed sudden growth in product demand from water treatment industry at the start of pandemic. The pandemic also impacted global production capabilities thus, creating bottlenecks in global product supply.

Manufacturers in China closed their factories during first quarter of 2020 due to Covid-19 pandemic. China, the largest supplier of caustic soda was deeply affected by country lockdown, restrictions on trade and travel as well as slowed product consumption in various end user industries. Many key geographical markets were under some sort of lockdowns or lockdown like situations during most part 2020. Decline in performance of end user industries affected the global product demand. 

In 2017, caustic soda market prices have witnessed drastic hike due to increased demand and tight supply. In 2018 price hike remained stable owing to rising demand from alumina producers around the world, especially in Asia. There was notable demand from alumina refineries from in China, India, Indonesia, Vietnam, the Philippines, and most notably Australia.

Caustic soda is highly corrosive and harmful to living organisms. Thus, there are strict guidelines and regulations for handling the product. Tight regulations governing the caustic soda market may act as a constraint during forecast timeframe. For instance, Chinese plants were continued to run at reduced capacity due to environmental checks at plants during late 2017. This resulted in competition amongst the key buyers in the value chain. For instance, alumina producers were competing each other for cargoes of raw material.

The Covid-19 pandemic has disrupted the supply chain. Virus crisis has resulted in reduction of production capacity in China – earlier, the plants were running at 80% capacity, now rates across the country have dropped to approximately 65%. Short term product demand expected to take a hit owing to virus-related demand erosion and product movement constraints. However, demand will recover after countries lift the lockdown and open international trade.