The production capacity of Caustic Soda is mainly concentrated in Asia, and the demand is mainly concentrated in Asia, Europe, and North America
After 2016, the global caustic soda industry has regained a stable growth pattern. As of the end of 2022, the global caustic soda production capacity reached 103.52 million tons, mainly concentrated in Asia, accounting for approximately 63.7% of the global production capacity, with China accounting for the largest proportion, accounting for approximately 45.6% of the global production capacity; North America and Western Europe account for 15% and 12% respectively, ranking second and third.
Caustic soda production capacity
In the past decade, the overall growth rate of global caustic soda production capacity has fluctuated between 4% and 6%. In 2012, global caustic soda production capacity expanded significantly, with a growth rate of nearly 10%. Since 2013, the growth rate of global caustic soda production capacity has gradually slowed down, and by 2016, the growth rate of production capacity reached negative growth. After this, the global caustic soda has regained a stable growth pattern. As of the end of 2022, the global production capacity of caustic soda has reached 103.52 million tons. The production capacity is mainly concentrated in the Asian region, accounting for approximately 63.7% of the global total, with China accounting for the largest proportion, approximately 45.6% of the global total; North America and Western Europe account for 15% and 12% respectively, ranking second and third.
Caustic soda demand
In terms of demand, except for the reduction of demand caused by the global COVID-19 epidemic in 2020, it has basically maintained a positive growth level in the past 10 years, of which the growth rate in the past two years is at a high level of 5.5%; As of 2022, the global demand for caustic soda has reached 85 million tons. From a regional perspective, global demand for caustic soda is mainly concentrated in Asia, Europe, and North America. At the same time, Asia is also the region with the fastest growth in demand. As of the end of 2022, the annual demand in Asia exceeded 53 million tons, accounting for approximately 62.8% of the total global demand. Asian demand is mainly concentrated in China. The demand for caustic soda in Europe is similar to that in North America, reaching 12.355 million tons in 2022, accounting for approximately 14.6% of the global total demand. It is reported that the growth points of demand in Europe are mainly concentrated in fields such as chemical, pulp, and soap industries. North American demand is mainly concentrated in the United States, with downstream industries such as chemicals, pulp, and paper making.
Caustic soda trade flow
According to the regional supply and demand gap, the global trade pattern of caustic soda has distinct characteristics. The main outflow destinations are the United States, Northeast Asia, Western Europe, and the Middle East, where production is relatively concentrated. The United States mainly flows to South America, Oceania, Canada, and some parts of Europe; Northeast Asia mainly flows to regions such as Oceania, Southeast Asia, Africa, and North America; Western Europe mainly flows to the European region; The Middle East mainly flows to Oceania, Africa, and Sutheast Asia.
Production capacity and output
China is the world's largest producer of caustic soda. From the perspective of the trend of caustic soda production capacity, supported by national policies and the rapid expansion of caustic soda demand from 2010 to 2014, China's caustic soda production capacity growth rate maintained a relatively fast level, with an average annual growth rate of about 7%, among which the average annual growth rate of production reached over 10%. In 2015, influenced by supply side reforms and environmental policies, the caustic soda industry chain underwent structural adjustments, while the production capacity and output of caustic soda showed negative growth month on month. After 2015, caustic soda was in a stage of rapid growth and development, and chlor alkali enterprises had a strong willingness to expand production capacity; Moreover, due to the relatively mature chlor alkali process and technology, the entry threshold is relatively low. As of the end of 2022, China's caustic soda production capacity has reached 44.47 million tons, with a production capacity of 39.8 million tons.
Regional distribution characteristics of production capacity
Due to the low economic added value of basic chemicals, transportation costs are relatively high. In the chlor alkali industry, production requires the collaboration of supporting projects from both the upper and lower levels of the industry chain to improve production efficiency, reduce costs, and thereby increase profits. Therefore, caustic soda production enterprises are relatively concentrated in areas with abundant raw salt resources and high production capacity, and the industry presents a regional distribution. From the distribution of production regions, East China, North China, and Northwest China are the main production areas of caustic soda in China. In 2021, the liquid alkali production capacity of the three regions was 21.625 million, 8.415 million, and 7.175 million tons, accounting for 47.39%, 18.44%, and 15.72% respectively, accounting for a total of 81.55%.
Caustic soda demand
China is both a major producer and consumer of caustic soda. From 2011 to 2021, the average annual growth rate of caustic soda consumption in China was about 5.2%. Taking 2015 as the boundary, it can be divided into two stages: rapid growth and stable growth. From 2010 to 2014, the annual demand for caustic soda in China increased from 19.34 million tons to 29.649 million tons, with an average annual growth rate of over 11%. In 2015, influenced by the supply side reform and environmental protection policies in the chemical industry, the caustic soda industry itself and some downstream industries underwent structural adjustments to the supply side reform. The production and demand of caustic soda showed negative growth, with demand dropping to 28.339 million tons, a decrease of 4.4% month on month. Subsequently, the demand for caustic soda in China entered a stable growth period, and since 2016, the consumption of caustic soda in China has remained stable at over 30 million tons per year. In 2022, due to the release of export demand and the collapse of domestic demand, the apparent consumption of caustic soda decreased to 36.5662 million tons month on month.
The main flow of caustic soda trade in China is from west to east and from north to south. The East China region is not only the main production and sales area of caustic soda, but also the concentrated alumina industry, papermaking industry, chemical fiber printing and dyeing industry, and chemical industry. Among them, Shandong is the province with the largest alumina production capacity in China, reaching 10.444 million tons in 2021, and also the province with the largest demand for caustic soda. In addition to domestic consumption, caustic soda will also be exported to Jiangsu, Zhejiang, South China, and other places. The main downstream consumers of caustic soda in the Jiangsu and Zhejiang regions are chemical fiber, printing and dyeing, and papermaking industries. Some caustic soda from Shandong and southern Jiangsu will flow into the Zhejiang region, mainly supplying local chemical fiber and printing and dyeing enterprises. The northwest region is one of the main production areas for caustic soda, with production far exceeding consumption, and is the main net outflow area for caustic soda. The main caustic soda product is flake caustic soda, which is relatively easy to transport and has a long distance, flowing to the southwest, south China, east China, and north China regions. The local consumption of caustic soda is mainly concentrated in the chemical fiber industry in Xinjiang and other regions. South China, central China, and southwestern regions are all regions where caustic soda enters, and the local demand for caustic soda is greater than the local supply. Among them, Guangxi in South China has a demand for 2.558 million tons of caustic soda in 2021, with a large demand for caustic soda in the alumina industry; The demand for caustic soda in Sichuan in the southwest region reached 1.471 million tons in 2021; Some regions in central China have a high demand for caustic soda in the printing and dyeing chemical fiber industry. Overall, the above three regions mainly rely on the supply of caustic soda from the northwest region and East China for replenishment.
China is a net exporter of caustic soda, and overall, the dependence on imports and exports of caustic soda is not high. For the domestic market, it is only one of the ways to regulate supply and demand balance; In 2022, the export volume will only gradually increase the export dependence to 8%. Compared to exports, the volume of imports is too small.
From 2010 to 2019, the annual export volume of caustic soda in China first increased and then decreased. In 2011, it reached its highest point of 2.1592 million tons, and its lowest point was 1.1474 million tons in 2019. The decrease in export volume from 2017 to 2019 is due to the relatively high level of domestic prices, which makes export prices less attractive to Chinese chlor alkali enterprises; Secondly, weak external demand resulted in a year-on-year decrease in export orders; Thirdly, local construction is limited, resulting in a decrease in the supply of liquid alkali in the market. Chlor-alkali enterprises mainly meet domestic demand, and export sources have decreased.
There are many reasons for the surge in export volume in 2022: on the one hand, overseas energy prices have raised production costs, and China's caustic soda has a price advantage, leading to a higher export enthusiasm of Chinese chlor alkali enterprises; On the other hand, external demand has increased, and the large-scale alumina industry in Indonesia has invested millions of tons of alumina production capacity, providing support for China's caustic soda export volume.
