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(ICIS) -- Global demand for caustic soda
will drop because customers will likely cut alumina and aluminium production in
the coming weeks, executives at US-based metal producer Alcoa said on Wednesday.
The Alcoa executives are in Houston this week to ask caustic soda producers to
give them some relief from rising prices. Alcoa's estimates that around 85kg of
caustic soda is used in the production of each 1 tonne of alumina, from which
aluminium is made.
As little as USD10-20/tonne is the difference between profitability and
making a loss at some smelters, one of the executives said. He declined to make
an exact estimate of caustic soda's share of production costs, but said it was
in double digits as a percentage.
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The US caustic soda contract price for November settled at USD445-470
dry short ton (EUR347-366/DST), level with October but up 128% from the start of
2011. Capacity shutdowns in the global alumina industry erased around
260,000 tonnes of caustic soda demand in the second half of 2011, according to
Alcoa. “We have an industry that is broken,” Mark Chrisman, the company's global
director for strategic raw materials, said to ICIS.
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On Monday, Alcoa announced a loss from continuing operations of USD193m
in the fourth quarter, caused by charges associated with the scaling back and
closing high-cost production, lower aluminium prices and continued market
weakness. That compounded a loss of USD172m in the third quarter and compared
with a profit of USD258m in the fourth quarter of 2010.
mrcplast.com
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