Caustic soda prices rise in May on strong demand, limited supply

Caustic soda prices rose at a robust pace in May 2017. Prices of caustic soda lye increased by 29.5 per cent year on year to Rs 36 per kg, the highest since January 2016. Prices of caustic soda flakes soared by 35.9 per cent to average at Rs 51.5 per kg in May this year. According to Centre For Monitoring Indian Economy (CMIE), the rise in prices was on account of a healthy demand from detergent manufacturers and restricted supplies from producing belts.

During April-May 2017, prices of caustic soda lye rose by 21.3 per cent to Rs 33.6 per kg and that of caustic soda flakes surged by 29.3 per cent to average at Rs 48.6 per kg.

Demand for caustic soda mainly stems from industries such as aluminium (major user), paper, soap and detergents.

Indian manufacturers face fierce competition from imported caustic soda, which is cheaper compared to the domestic produce. This is due to high input and logistics costs within the country. As a result, domestic manufacturers are forced to bring down their prices in tune with global pricing.

According to CMIE estimates, prices of caustic soda lye are likely to rise by 4 per cent and that of caustic soda flakes are expected to increase by 5-6 per cent during the year.