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Global demand for caustic soda to drop on the back of cut aluminium production

January 12/2012

(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.

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. УWe have an industry that is broken,Ф Mark Chrisman, the company's global director for strategic raw materials, said to ICIS.

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.

Author:Marina Ivanova
Category:General News
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