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US Caustic Soda Exports Rise 25%, EDC And PVC Decline

Apr 12, 2018

Compared with the same period of last year, the US sodium hydroxide export increased by 25% in the first two months of 2018, partly because Brazil suddenly shut down the chlor-alkali plant in mid-January, causing Braskem to seek import before restarting.

The February export data released by the US International Trade Commission this week shows that in January and February of this year, the major raw materials for alumina and pulp and paper industry were in Brazil, Australia, Jamaica, Canada, and Mexico. - The shipment volume of caustic soda was up from the same period of last year.

Brazil is the largest recipient of caustic soda in the United States. In 2017, it received 2.56 million metric tons of caustic soda in the United States.

The device for Braskem's chlor-alkali plant in Alagoas was destroyed by a fire and forced to shut down for about two months. During the blackout, Braskem received more than 30,000 tons of caustic soda from the United States and Brazil to meet supply demand. According to sources familiar with the company's operations, the factory began re-starting in mid-March.

According to ITC data, in total, Brazil received a total of 470,231 tons of US caustic soda in January and February, an increase of 24% over the same period of last year.

Caustic soda is a by-product of chlorine production in chlor-alkali plants, and chlorine is a key raw material for downstream polyvinyl chloride chains. Vinyl chloride is mixed with ethylene to produce ethylene dichloride, and the resulting vinyl chloride monomer is converted back to polyvinyl chloride, which is widely used in the construction industry to make pipes, vinyl sheets, and window frames.

Last Wednesday, China proposed to impose a 25% tariff on 106 U.S. products, including PVC and EDC, in response to the US President Donald Trump levying an import tax on 50 billion U.S. dollars of Chinese goods. Trump said on Thursday that the United States may impose tariffs on another 100 million U.S. dollars of U.S. products. China’s Ministry of Commerce stated in a statement on Friday that the Chinese government is not willing to fight with it but is not afraid of fighting a trade.

China has imposed anti-dumping duties on US PVC. According to a US manufacturer, 306,079 tons of PVC imported from the United States in 2017 was re-exported to Southeast Asia. According to ITC data, the amount of PVC imported from the United States last year decreased by 25% year-on-year, which was a decrease of 8.5% in the first two months of 2018 compared to the same period last year.

However, tariffs will affect EDC. China is the largest market for US EDC exports. Last year's total EDC exports were 370,844 metric tons, which accounted for 27% of total exports. However, compared to 2016, China’s import volume in 2017 decreased by 25% because China and other Asian markets are operating chlor-alkali plants at a high rate to obtain high profits from caustic soda production and utilize chlorine production to produce more domestically. EDC reduces the demand for imports.

According to the latest ITC data, in the first two months of this year, China received 10,098 tons of EDC, which is a 62% drop from the same period in 2017.

The data also shows that U.S. VCM exports to China increased significantly in February. Most U.S. VCMs are contractually exported to Mexico, Colombia, and Canada, with almost no spot exports. In 2017, China received a total of 268 tons of U.S. VCM, accounting for less than 1% of total exports (1.26 million tons).

However, in the first two months of 2018, China received 3,635 tons of U.S. VCM -- more than 13 times the same period in 2017, which is 1.5% of the total seaborne volume.