Demand Dynamics
Caustic soda is sold
in two major forms - lye and solid. More than 75% of the production
and sales is in the lye form because caustic soda is generated in
liquid form. This liquid form called `lye' is then evaporated to
obtain solids or flakes. Most of the end users use aqueous solution
of caustic soda. Thus, it makes economic sense to keep it in lye
form.
Transportation of
lye is cumbersome whereas solid form is easy to transport. It is
primarily for this reason that lye is converted into solid
form.
Paper & pulp
accounts for the major chunk followed by manmade fibers (viscose
industry).
|
Domestic consumption
pattern
|
|
|
Paper &
pulp
|
30%
|
|
Manmade
fibres
|
25%
|
|
Soap
industry
|
14%
|
|
Alumina
|
12%
|
|
Chemicals
|
9%
|
|
Water
treatment
|
2%
|
|
Others
|
8%
|
Demand spread over
various user sectors insulates caustic soda from the downtrend in
any one sector. Conversely, spurt in demand in any one of the user
sectors does not translate into equivalent growth in demand for
caustic.
Demand also suffers
from substitution effect to some extent. Based on the
considerations such as price, availability and the final
application, it is substituted by other alkalis such as soda ash.
Though the extent of substitution is small, its effect gets
magnified during recession when demand from user sector falls thus
adding to the woes of the producers.
