Author Argus

Chlor-Alkali experts George Eisenhauer, Bernard Law and Stephanie Koenig talk to Lauren Williamson, VP, Product, about the long-term fundamentals of the caustic soda market, including:

Policy impact on battery demand and what that means for the North American supply chain

  • Where European opportunities lie among continued optimisation processes and net zero targets
  • How Northeast Asia's role will change with diminished reinvestment in export capability, and against a backdrop of Southeast Asia's growing demand


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Lauren: Hello, I'm Lauren Williamson, VP of Product for Argus Chemicals. And in this "Chemicals Conversation" podcast, we're bringing you really interesting fundamentals, forecast insight on caustic soda. And it's perfect timing because Argus has just recently launched our Caustic Soda Analytics service, giving a complete supply-demand balance picture for the global market. We'll be hearing from our three Chlor-Alkali experts today, George Eisenhauer, Stephanie Koenig, and Bernard Law. George, why don't we start with you, and let's focus in on the Americas. Maybe tell us a little bit about your thoughts with the Inflation Reduction Act. It's driving investment in battery materials. So, what is this going to mean for the North American supply chain?

George: The Inflation Reduction Act, along with other COVID-era investment opportunities in the U.S., and bills that were driving the economy, we've seen a significant increase in investment in the North American assets. The battery materials are one of those investments that's being made in the U.S. market trying to integrate lithium hydroxide battery materials all the way through auto manufacturing. So, as a percentage of the automobiles being requested to be produced in the U.S. in order to meet some of the rebates or the incentives, we are having the investment coming all the way back into the battery materials and subsequently caustic soda. So, caustic soda is utilised to make lithium hydroxide, the battery-grade lithium hydroxide. So, this is increasing domestic demand for caustic in the U.S., as well as other Americas countries. So, this is going to support caustic soda demand in the U.S., as well as others in the region.

Lauren: Stephanie, we've had a period of painful energy prices, where will European opportunities lie among continued optimisation processes and net zero targets?

Stephanie: So, energy prices in Europe are actually still elevated, and there is very little to suggest that they will normalise anytime soon. So, with these higher power prices, the pressure coming from inflation, overall still higher raw material prices, we see higher cash costs along the supply chain, and that's going to be reflected in the caustic soda base price. So, the baseline of those prices actually is quite unlikely to return to what we've seen before to any meaningful length of time. So, what this means to customers is that they will be under pressure to continue to optimise processes, to limit raw material usage, and try and control spending that way.

But we're also going into quite an exciting period of the energy transition, working towards reaching the net zero target in Europe by 2050, and that's probably going to bring some new demand end-uses, and some quite significant growth in the coming years. So, we are basically going to decouple economic growth from resources used. So, one sector that could see growth is the recycling space, as we just try to reuse and recycle over and over again what we've already got. And another sector is the battery materials industry, which is obviously aimed at electric vehicles. So, both sectors are in their infancy. We are only at the start of the energy transition, but we know that there is significant investment going on, and significant investment is planned in the next few years. So, we could actually see those sectors scale up significantly in the next 10, 20, maybe even 30 years. And I'm pretty sure that that will support organic growth of our industry quite well in the future.

Lauren: Bernard, I know there are some really interesting shifts taking place right now for your region. How will Northeast Asia's role change with diminished reinvestment in export capability, and against a backdrop of Southeast Asia's growing demand?

Bernard: What we are looking at right now is the Northeast Asian market is a maturing market, and in a way we can really see that as compared to 5 to 10 years ago, the overall run rates, especially in China, has risen so much to 85, 86%. This is an indication of a more mature market. What happened right now, especially in China, it’s still about expansion and investment in capacity expansion, but most of these capacities towards the inland, and not too much of the coastal region where you can export directly out into the outside the market.

Outside of China, Taiwan, Japan, and Korea, you don't see a lot of new investment coming in as a market growth 5 to 10 years down the road, and especially in China, and the domestic demand is picking up very well. And you can see that the export capability of the Northeast Asian region is going to shrink for a period of time. We are going to see a shift of the investment coming in, especially in Middle East and India, and that will become the future emerging exporting hubs for caustic soda.

So, the Middle East being very rich in hydrocarbon resources, and with a very competitive issue, variable cost, to enable them to compete very well in the market in future, especially when the new Adnoc-Reliance joint venture plant comes on stream in the UAE - you’ll see a significant shift in the trade flow.

The Southeast Asian market will remain a very attractive and important region, and many of the producers are eyeing it right now. Producers are looking at the expansion capacity, Greenfield as well as expansion. But it will take three to four years before this new capacity will come on stream. So, in summary, we're going to see the shift the export capacity actually away from Northeast Asia, and towards the Middle East and India.

Lauren: I'd like to say thank you to our guests, George Eisenhower, Stephanie Koenig, and Bernard Law. You've all shared great fundamentals, forecast insight for caustic soda. Now, a reminder to our listeners, Argus has just launched the Argus Caustic Soda Analytics service, which includes historic and 10 years’ forecast fundamentals data, and it features really rich insight into the entire value chain.

For more information our listeners can visit