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| India Infoline Sector Reports | Mon, 16-Feb-2004 10:46:43 IST (GMT+5:30) | |
| Caustic soda | ||
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Demand For Co-Product Electrolysis of salt results three products - caustic soda, chlorine and hydrogen in the proportion of 1:0.88:0.025. The first two form the major products whereas hydrogen comes in the negligible proportion. The combination of caustic soda and chlorine in the above given proportion is termed as an Electrochemical Unit (ECU). For caustic soda manufacturers balancing the prices of caustic soda and chlorine becomes critical to get maximum returns on an ECU. However as caustic soda and chlorine are used in different kinds of industries, the demand for them is rarely balanced. This creates problems for manufacturers in marketing these two products. Further, the demand for one product affects the supply of other commodity thus affecting its prices. In the international market when caustic soda is in oversupply, producers compete fiercely with each other on the price front. The lower realization is cross subsidized by realization on chlorine in the other markets. When the price of chlorine rises in the international market the producers sell caustic soda even below its cost price. But when supply of chlorine increases leading to a fall in its price, the price of caustic becomes stable as the producers don't take a price cut.
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