Caustic Soda Market Overview
In 2022, caustic soda market stood at 88,500 kilo tons, grown with an annual average growth rate of 2% since 2016. It is further estimated to grow with a compounded annual growth rate of 2.8% to reach over 116,202 kilo tons by 2032.
Introduction
Caustic Soda is a white ionic compound also known as sodium hydroxide (NaOH). The production of caustic soda is dependent on production of chlorine as it is a by-product of Chlor-Alkali process. The combination of chlorine and caustic soda is termed as Chlor-alkali. Sodium Chloride (NaCl) is electrolysed to form chlorine which is primary product and caustic soda is produced as the secondary product. Chlor-alkali is mainly produced using membrane cell technology and other commercial technique is diaphragm cell technology. Caustic soda has a wide range of application with alumina production being the top consumer of caustic soda having around 20% market share. Other applications include organic chemicals, food, soaps and detergents, textiles, water treatment and steel/metallurgy - sintering. Asia pacific dominates the caustic soda demand followed by North America and Western Europe. Demography of the region is an important indicator for caustic soda consumption as it is a bulk commodity chemical, used in various day-to-day applications.
Global Caustic Soda Demand Supply Analysis, 2016-2032 (Kilo Tons)
Source: Secondary & Primary Research and Prismane Consulting estimates
Caustic Soda Supply Overview
In 2022, global caustic soda capacity was estimated to be around 101,950 kilo tons that has grown from 92,985 kilo tons in 2016. The caustic soda capacity is further projected to cross 106,750 kilo tons (without speculative) by 2032, owing to new capacity additions mainly in Asia Pacific to address the growing demand of caustic soda from various end use industries. Asia Pacific is the biggest caustic soda producer accounting for around 60% of the global capacity followed by North America accounting for around 16% of the global capacity. All other regions including Western Europe, Central & Eastern Europe, Central & South America, and Middle East & Africa together accounted for remaining share of the global caustic soda capacity.
Caustic Soda Demand Overview
The global Caustic Soda demand was estimated to be around 88,500 kilo tons in 2022 and it is poised to grow in line with GDP during the forecast period 2023-2032. Asia-Pacific and North America together accounted for more than 70% of the global caustic soda demand. During the forecast period, Asia-Pacific region is projected to show an increase in consumption for applications such as Textile Alumina, EV batteries, Pharmaceuticals, and other applications.
Global Caustic Soda Demand, By Region 2022 (Kilo Tons)
Source: Secondary & Primary Research and Prismane Consulting estimates
In Asia Pacific, China depicts the largest share in the region followed by Japan, South Korea, and India. For the forecasted period, the demand in the region is expected to cross 77,500 kilo tons. Demand for caustic soda in North America stood at 11,500 kilo tons in 2022, accounting for 13% of the global caustic soda demand. It is forecast to witness a CAGR of 1.6% to reach 13,350 kilotons by 2032. The USA accounted for 85% of the regional caustic soda demand followed by Mexico & Canada at around 7.4% each. The United States is also the largest caustic soda exporter, averaging more than 5000 kilo tons in exports between 2016 and 2021, and is expected to maintain this export volume in the forecasted period.
Caustic Soda Market in China
China has the highest production capacity of caustic soda worldwide, accounting for approximately 45% of the total global capacity. The country s major producers include Tangshan Sanyou Chlor-alkali Co., Inner Mongolia Junzheng Chemical Co., Ltd, Inner Mongolia Zhonggu Mining Co., Ltd., Shingpu Chemicals Ltd, Jiangsu Meilan, Shaanxi Beiyuan Chemical Industry Group Co., and Dongying Huatai Chemical Group. Xinjiang Zhongtai Chemical Industry and Weifang Yaxing Chemical Co. Ltd. are among the top producers with installed capacities exceeding 1,000 kilo tons. In 2022, Caustic Soda demand in China stood at 37,000 kilo tons, accounting for over 40% of the global caustic soda demand. China is a net exporter in caustic soda trade, with average export volume of over 1200 kilo tons between 2016-2021, primarily in the form of aqueous solution. Several countries such as Australia, Indonesia, Vietnam, Philippines, Singapore, and Brazil are essential trade partners for China. In 2021, Australia alone imported around 450 kilo tons of caustic soda from China, making it the largest importer of this product. Meanwhile, the ASEAN is the second-largest importer of caustic soda.
Caustic Soda Application Overview
Alumina application dominates global caustic soda market, accounting for 21% of total demand on the back of large aluminium production. Alumina is used in the Bayer process, which is a common method for extracting aluminium from bauxite ore. Caustic soda is used in the Bayer process as a key reagent to dissolve and separate alumina from the bauxite ore. Organic chemicals and inorganic chemicals together hold around 26% share of caustic soda demand. Food, pulp & paper accounts for 18% of the demand while all the other applications including textiles, soaps & detergents, water treatment, petroleum refining, and others together account for the remaining 35% of the global caustic soda market.
Global Caustic Soda Demand, By Application 2022 (Kilo Tons)
Source: Secondary & Primary Research and Prismane Consulting estimates
According to Prismane Consulting s integrated Chlor-alkali market model, most of the caustic soda capacities are concentrated in Asia-Pacific especially China. It is further estimated that China will increase its market share in exports during the forecast till 2032. The chemicals & alumina industry are expected to witness faster growth in comparison to other major industries.
Caustic Soda Market Drivers
Diversified Range of Uses
Caustic soda is used in the extraction of alumina. According to the International Aluminium Institute, Alumina production in the world stood at 140,083 kilo tons in 2022, up 1.1% or 1,496 kilo tons compared to 2021. Since alumina is used in major end-use markets such as transportation, construction and packaging, its demand growth will in turn accelerate the growth of caustic soda demand during the forecast. Demand for alumina also has high potential in the automotive industry, since it offers several benefits such as safe, rapid, sustainable, and cost-effective way of reducing emissions and boosting performance. Alumina production will be driven by increased demand for aluminium, which will further propel the demand for caustic soda during the forecast period.
Increasing Demand for Alumina
Caustic soda is employed in a variety of end-use industries, including textiles, soap & detergents, pulp & paper, organic & inorganic chemical products and so on. These broad range of applications make it a key demand driver for the caustic soda market. Majority of the chemicals produced directly or indirectly use caustic soda during manufacturing. It is also essential in the manufacturing of polyvinyl chloride (PVC), solvents and plastics. Further, caustic soda is used as a reactant and/or intermediate in various production processes. Other applications include dying of synthetic fibres, in rubber recycling, acid neutralization Growth in the chemical sector due to increased demand for chemicals especially in the developing economies supported by rapid industrialization presents a major opportunity for the growth of caustic soda market in the upcoming years.
Electrification
Caustic soda is employed as an electrolyte solution that helps ions move between the cathode and anode, allowing electricity to flow. Additionally, caustic soda is utilized in the recycling of lithium-ion batteries, aiding in the extraction of valuable materials that can be reused. Caustic Soda is emerging as a key ingredient in the production of EV batteries, and its role is projected to drive the market forward. Governments and regulators all around the world are making strict rules and offering incentives to encourage people to use electric cars. Consumers are switching to electric vehicles to reduce pollution and fight climate change. As a result, automotive manufacturers are investing heavily in the development and production of EVs, which is driving demand for electric car batteries.
In December 2022, South Korean petrochemical company Hanwha Solutions unveiled its plans to expand its caustic soda production capacity at its Yeosu location. Caustic soda is widely used in the manufacturing of rechargeable batteries used in EVs as a purifying agent, and the company aims to invest in the 270 kilo tons expansion in response to the growing demand for EV batteries all over the world.
Recent Developments in Caustic Soda market
Shintech Inc (Shin-Etsu) operates a 1157 kiloton Caustic Soda plant in Plaquemine, Louisiana. The company is planning to add 730 kilotons of Caustic Soda capacity in two phases. The first phase is expected to be completed in early 2022, while the second phase is expected to be completed by early 2024. Shintech’s production capacity will reach 1,883 kilotons of caustic soda per year upon completion.
In April 2020, Braskem decided to shut down its 79 kilo tons caustic soda facility in Camacari, Bahia, as the 41-year-old plant had reached the end of its lifespan. Brazil is a net importer of caustic soda and has been importing an average of 2,283 kilotons between 2016 and 2021.
In 2021, Occidental Chemical shut down its 180 kilo tons plant in Niagara Falls, New York, reducing the total capacity at the site to 191 kilotons. Other plant shutdowns in the country include Olin’s 225 kiloton plant in Plaquemine, Louisiana, and the 230 kilo tons plant in Freeport, Texas.
Occidental Chemical expanded the capacity of its Battleground, Texas plant from 515 kilotons to 580 kilo tons in 2022. The company plans to further increase this capacity by 80% in 2026.
Unipar Carbocloro operates two caustic soda plants in Brazil: a 400 kilo tons plant in Cubatao, Sao Paulo, and another plant in Santo Andre, Sao Paulo, which underwent expansion from 160 kilotons in 2016 to 180 kilotons. The company plans to further expand the Santo Andre facility to 212 kilotons by 2024. It also plans to start an 11 kilo tons plant in Bahia, expected to commence production in 2025.
Unipar Carbocloro operates its mercury cell-based plant in Pilar with a production capacity of 186 kilo tons. The company plans to increase this capacity to 198 kilotons by 2024.
Covestro plans to start a new large-scale caustic soda plant in Tarragona, likely to begin in 2023. The plant will have a production capacity of 814 kilo tons.
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