Caustic soda is also known as sodium hydroxide (NaOH) or lye. It is used in a wide range of applications in industries such as paper & pulp, soaps & detergents, water treatment, textile finishing, refining bauxite to manufacture alumina, and metal processing. Demand for caustic soda has increased over the past few years. It is produced as a byproduct during the manufacture of chlorine by electrolyzing a solution of brine. Hence, caustic soda supply depends on chlorine and indirectly on polyvinyl chloride (PVC).
Organics, paper & pulp, and alumina application segments accounted for major share in the market. Caustic soda is used to manufacture organic chemicals for neutralization of acids, dehydrochlorination, pH control, and off-gas scrubbing. It acts as a catalyst during chemical reactions. Rise in chemical production across the globe is anticipated to drive the global caustic soda market. It is used in the production of Kraft pulp and lignin extraction in the pulp & paper industry. Growing demand for graphic paper, tissues, and specialty paper is likely to boost the sale of caustic soda in the next few years. Other significant applications of caustic soda include soaps & detergents, water treatment, and inorganics. Caustic soda is extensively used in the manufacture of inorganic chemicals such as ceramics, glass, and paints.
Growth of aluminum and paper & pulp industries is expected to augment the demand for caustic soda. Growth in the textile industry, especially in Asia Pacific, is a major factor that is anticipated to drive the market during the forecast period. However, the production process of caustic soda is energy-intensive. This is anticipated to restrain the caustic soda market. High investment in membrane technology and longer period of return on investments are likely to hamper the entry of new entrants in the market. Additionally, the demand for caustic soda is highly volatile, as it is directly dependent on the chlorine industry and PVC production. The major application of PVC plastic is in the construction industry, hence fluctuations in the growth of the construction industry indirectly affects the supply and prices of caustic soda. Expansion of the market in untapped economies and export of caustic soda are anticipated to create opportunities for caustic soda manufacturers across the globe.
Asia Pacific dominated the global caustic soda market in 2018. China accounted for more than 40% share of the global caustic soda market in 2018. The country is a major production hub for organic products, textile manufacturing, and aluminum production. Growth of end-use industries is anticipated to drive the caustic soda market in China during the forecast period. Currently, India is a major importer of caustic soda in spite of its substantial domestic production. Authorities in India have enforced certification from Bureau of Indian Standards (BIS) for caustic soda imports. China and Japan are major exporters to India.
North America and Europe together accounted for more than 25% of the global caustic soda market. Caustic soda manufacturers in the U.S. have shifted from the mercury cell or diaphragm process to the membrane technology. The membrane technology is more environmentally friendly than other the two processes. U.S.-based caustic soda manufacturers are expected to find lucrative opportunism due to growth in exports to Latin America, Africa, and South East Asia. Some major manufacturers of North America include Olin Corporation, Westlake Chemical, Shintech, and Occidental Petroleum Chemical.
High demand for caustic soda from alumina refinery especially in Brazil is projected to drive the market in Latin America. Demand for caustic soda in Argentina is less due to slow economic growth and less buying power. Demand for this soda was stable in Peru and Mexico in 2018. The market in Africa is anticipated to expand at a rapid pace owing to the rise in demand from the pulp & paper industry. Large number of international paper manufacturers, such as Sappi Limited and Mondi plc, operate in Africa. The new alumina refinery in the UAE is in the final stages of commissioning. Initially, it is likely to consume hundred kilo tons of caustic soda. This is projected to boost the caustic soda market in the Middle East in the next few years.
Key players operating in the global caustic soda market include The Dow Chemical Company, BASF SE, Gujarat Alkalies and Chemicals Limited, Occidental Petroleum Corporation (OXY) (U.S.), Formosa Plastics Corporation, Kemira Chemicals, Inc., Shandong Haihua Group Co., Ltd., Solvay Chemicals, Tokuyama Corporation, Aditya Birla Chemicals (India) Limited, Tata Chemicals Ltd., and LG CHEM.
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