North America
The North American sodium chlorate market made considerable progress in 2010 and continues to run at good rates in H1 2011. The chlorate sector moved out quickly of the recessionary low and overall sales volumes have recently been at a satisfying level. In fact, there have been instances of tightness following the ongoing healthy offtake from pulp and paper and unconfirmed operational issues, which have resulted in shipment delays. The tightness has been particularly evident in the spot market. With regard to pricing, the upward pressure persists as sellers continue to push for increases.

Europe
The first months of the year have been characterised by limited availability for sodium chlorate due to healthy offtake from the pulp and paper sector. Producers are trying to maximise output in order to meet the good demand in the domestic and export markets, while high electricity pricing continues to put margins under pressure. In 2010, spot power prices in the Nordic region were at an average €53/MWh, which was up from €35/MWh in the previous year. Since power costs make a significant contribution towards overall operation costs, high electricity pricing was a major issue for the supply side in 2010 and continues to be so in 2011. Thus, producers are expected to push for further sodium chlorate price increases as soon as terms permit.

Deep Sea
The Brazilian sodium chlorate market in 2010 was characterised by recovery from the downturn. Pulp buyers increasingly ordered higher volumes, which quickly translated into rising chlorate output in the domestic market and higher chlorate imports from the traditional supply sources. Imports were in line with pre-crisis levels of more than 10,000 mt/quarter. The second highest figure was observed in Q3 2010 with 14,940 mt; just 1,700 mt below the historical high that was seen in the same period of 2008. Most sodium chlorate imports in 2010 were of Canadian origin with about 46% of the total (49,800 mt).

Hydrogen Peroxide

North America
The North American hydrogen peroxide market is again becoming very tight with producers increasingly struggling to ensure that their customers receive all the product that they require. Firmer than expected demand during Q1 this year has meant that industry stocks have remained at a comparatively low level even though average plant operating rates have generally been high. There is little prospect that these problems will be resolved quickly as many plants require obligatory maintenance shutdowns in Q2 or later in the year, which mostly cannot be delayed, further reducing flexibility.

Europe
For the first time in more than a decade there is a major shortage of hydrogen peroxide in the European domestic market. Several large and some smaller consumers have now clearly been unable to obtain as much product as they wished from their normal or contracted suppliers and have urgently sought supplies from other producers but without more than nominal success. It is evident that there are now no European producers with any spare hydrogen peroxide. Most suppliers barely have sufficient product to meet the needs of their regular customers and they are unable to allocate any product outside their usual commitments.

Deep Sea
The impact of what is now officially called the Great Eastern Japan Earthquake Disaster on Japan’s hydrogen peroxide industry has been very severe with 50-70% of the country’s output likely to be curtailed for up to two months. It appears that damage to the affected plants may not be too serious, which is a benefit in the longer term, but loss of raw materials, utilities and in particular, the rolling power blackouts introduced by the government are a severe handicap to resuming full production. It is just not possible to re-establish the stable running conditions needed to maintain AO working solution chemistry in good order without a continuous reliable power supply.

North America
Caustic soda prices are on the rise in response to tighter supply conditions. In addition to production issues at local plants, the limited availability of imports from Europe and Asia has contributed to the tightness in the domestic market. In particular, the West Coast has been affected by the disruption to supply from Asia. The $40/dst caustic soda price increase that has been pending in the US market for several months has now been accepted. Most US producers have made subsequent caustic soda price nominations between $50-60/dst, and one major announced a further $50/dst in H2 April. As a result, US producers are targeting price increases of around $150/dst during Q2, which includes the $40/dst plus $60/dst plus the latest $50/dst.

Europe
The attention of the market in April was focussed on the Q2 contract negotiations. A number of producers in Northwest Europe had been pressing for price increases of around €50/dmt, but faced with mounting resistance from buyers, sellers struggled to achieve their targets. Though there were reports of double digit increases in the early stages of the negotiations, in the latter stages of the discussions there was a prevalence of rollovers or modest price increases. There remains a divergence of perception about the supply/demand balance. Buyers are generally of the opinion that the market is well supplied, but producers argue that they are struggling with low inventories due to planned and unplanned maintenance outages and healthy caustic soda demand. Availability for the export market remains constrained.

Asia/Pacific
The caustic soda market has seen upward momentum and spot export prices have risen for late April-June shipments. Regional spot export prices have been moving up continuously over the past six weeks in unusual circumstances triggered by supply constraints in North East Asia, coupled with the earthquake and tsunami in Japan. However, the price range has recently widened due to improved availability, as some Chinese sellers are focussing on liquidating their inventories. There are no spot cargoes reported outside of China. Spot export prices are expected to remain relatively stable for the next few weeks due to power rationing measures in China and a series of planned maintenance outages in Asia and the Middle East that will limit availability.

North America
Market demand for caustic potash is described as good and getting better daily in the agricultural end use market segment. Producers are anxiously watching KCl demand for fertilizer, as a strong demand could lead to further KCl raw material price increases at mid-year. Producers indicate margin preservation is a key driver for KOH pricing activity.

Europe
European KOH producers have been pushing hard for the implementation of a double digit price increase in Q2. Prices in most markets have risen by around €20/lmt following higher KCl costs, which producers have been trying to pass on to customers. At the same time, several sellers have confirmed that with the recent KOH price increase margins have improved; however, the progress has been modest and margin pressure persists. Supply and demand are currently described as well balanced. Sellers are moving adequate volumes and no disruptions to deliveries have been reported.

North America
The market continues to make tentative progress towards recovery. There are increasing signs of stability. Positive drivers are projected to contribute to gently rising consumption. However, the market is increasingly dominated by export activity and this is generating a healthy environment for producers.

Europe
There are signs that the market is exhibiting a greater firmness so far this year than had been anticipated. It appears that production of soda ash has risen by around 15% more than a year ago. There is a view that this is due to modestly rising domestic European demand together with an increased rate of export shipments.

Asia/Pacific
The market in China continues to be dogged by the unresponsive demand characteristics that have been in evidence over recent months. Domestic pricing continues on its downwards track. There are growing signs of nervousness among producers over the possibility of ongoing erosion of their margins.

North America
Domestic producers took advantage of several factors to raise prices, by 3cts/lb in March and by another 3cts/lb in April. They have also nominated 5cts/lb for May and at the time of writing one supplier had announced a further 5cts/lb for June. Continued slow domestic demand was overtaken by the impact of firm ethylene, the ‘tsunami effect’ adding to an already strong export market and domestic production issues, including a Georgia Gulf force majeure at Plaquemine. However, on the international stage, at the time of writing there were signs that a reversal may not be looming. A sharp drop in world energy markets added to the mood of growing resistance amongst converters.
Europe
April PVC contracts increased €15/mt on average, thus producers recovered slightly more than ethylene, but they only effectively recouped their losses from the previous month. In May, higher prices once again look virtually assured, though the scale is yet to be clarified. Suppliers nominated +€35/mt to +€75/mt, with most within +€50-60/mt. This is based on a combination of lagging margins, firmer ethylene, low inventories, seasonal demand and viable export alternatives. Buyers seem to accept the principle of an increase, though they are targeting much closer to a rollover.
Asia
The PVC price trend remains flat this week. However, there are signs of growing anxiety among buyers. Sharp falls in crude oil and commodity prices have further impacted sentiment in the Asian market. Chinese buyers are expecting a drop in the price of PVC futures to occur. Though some re-exporters have raised their purchase volume in response to the recent gains in the domestic Chinese resin market, most of these orders were finalised below the mid $1200s/mt cfr. Others in India and Southeast Asia are anticipating slower demand to emerge due to the approaching monsoon season in June. Moreover, there are signs that Japan’s PVC production is slowly recovering from the disruption caused by the earthquake and tsunami in March.