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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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Supply Total caustic soda capacities added during the period 1994-98 was 0.824mn tpa. This increase was at a CAGR of 12%, whereas consumption grew at CAGR of only 4.5% during the same period. In FY98, new capacity addition was to the tune of 0.275mn tpa. The capacity additions came from IPCL, Mardia Chemicals, Standard Industries, SPIC, Sree Rayalseema, Search Chemicals and Travancore Chemicals. Out of this 0.275mn tpa capacity, IPCL and Mardia Chemicals have contributed 0.1mn tpa each. The remaining capacity additions came from other players. GACL has postponed its proposed expansion. A host of small plants were also commissioned in the last two years. Most of these capacity additions were planned in early 90's when the domestic caustic soda sector was doing well. Reduction in import duty from 65% to 32% over the last three years resulted in cheap import of caustic soda in the country. This was aided by the depreciation in the currencies of South East Asian countries, which made the imports from these countries even cheaper. The slapping of additional customs duty in the recent budget will restrain imports to some extent during FY99. Domestic over capacity and cheaper imports resulted in a glut of caustic soda in domestic market in the last few years. This can be seen from the fall in capacity utilization over the years. Caustic soda production trends
The average capacity of the domestic caustic soda plants is 150 tpd as against the global size of 450 tpd. This indicates very low economies of scale. GACL is the only domestic manufacturer with global scale capacity. Chlorine, which is generated as a co-product in the process of production of caustic soda by the electrolysis of salt influences the supply of caustic. This is because user sectors for caustic soda and chlorine are completely different. Therefore increase in demand for chlorine results in oversupply of the other & vice-a-versa unless demand from both these sectors increase simultaneously, which is rarely the case.
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