Caustic soda exporters and importers are none the wiser after the EU and the US defined the framework of a trade deal without specifying all details. The agreement stipulates a 15pc import duty into the US for EU origin goods, whilst the standard import rate into the EU will remain seemingly unchanged at 5.5pc. The parties have also agreed on a zero-to-zero tariff for a number of strategic products, including some chemicals. All changes were to take effect 1 August but have been pushed to 7 August. The fact that the agreement is not legally binding and some elements have yet to be negotiated is once again creating uncertainty over whether or not goalposts might move again. Sellers and buyers still factor the risk of changing tariffs into their price equation, with importers requesting guaranteed delivered prices which most traders are not willing to agree to.
Caustic soda and related products are unlikely to be viewed as strategic by either party as traded volumes are relatively small. The US imported 114,000dmt of caustic soda lye from the EU in 2024, whilst exporting 288,000dmt in the opposite direction in the same period. The uncertainty around tariffs has made no notable difference to trade activity in the year so far. Sellers and buyers periodically refrained from concluding new deals in order to not cross over with important deadlines for potential new tariffs or countermeasures, but ultimately activity has been driven by supply/demand fundamentals on either side of the Atlantic.
EU caustic soda exports to the US have been subject to a 10pc duty since April. In the year to May, EU to US caustic soda exports almost halved to 29,000dmt (YTD May 2024: 54,000dmt) because a more intense than usual spring maintenance season and some unplanned production losses tightened European supplies. Notable disruptions included a planned turnaround at Dow in Stade, which is only undertaken every few years, and one at Nobian in Botlek which was followed by major technical issues that lasted into July. As is usual in these circumstances, sellers defaulted to focussing on European contract supplies at the expense of exports.
US exports to the EU rose from 78,000dmt to 130,000dmt in the analysed period despite potential EU countermeasures. Higher shipping rates were seen to southern Europe and especially Portugal and Italy in order to offset shortfalls from other European sources. But there was also a rise in supplies to Finland, where buyers continue to value a more diverse supply portfolio, as well as to Belgium where a new strategic set-up has regular US volumes arrive into a new tank.
It is not unusual for traded volumes to vary substantially from one year to another. Traders and buyers will likely adjust their price ideas based on any new tariffs as opposed to completely changing strategy and triggering a longer lasting shift in exported or imported volumes. Northwest European export prices are currently at $415-440/dmt fob, whereas import prices in the Mediterranean and Black Sea area are now at $560-575/dmt cfr, including duty.
Author name: Stephanie Koenig
