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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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Caustic Soda Update (April – November 1999) Chlor-Alkali Industry Production Trends (in tons)
Source: Indiainfoline The chlor -alkali industry one of the oldest chemical based industries is showing signs of recovery. The month of November recorded a growth rate at 9.5%yoy for soda ash production, highest growth rate among chlor-alkali industry segment for the eight-month period. Improved demand from the glass and detergent industry contributed to higher production in this period. During the same period however caustic soda recorded a negative growth. This was on account of oversupply and sluggish demand from paper and aluminum industry-the largest consuming sectors. Production of chlorine recorded the highest decline of 11.0%yoy in the April to November period. This was because chlorine is a by product generated from caustic soda production which itself recorded negative growth in this period. Price Trends Caustic Soda (Rs/ton)
Source: Indiainfoline Soda Ash (Rs/ton)
Source: Indiainfoline Prices of caustic soda and soda ash have remained nearly flat in the Sept99 to Nov 99 period. The oversupply in the US market resulted in depressed international prices. Large-scale dumping by China adversely affected the domestic soda players resulting in depressed soda ash prices in this period. Soda ash and casutic soda prices reflected a 16.5%yoy and 4.6% yoy decline over last year. Domestic producers in turn offered discounts to improve the local offtake and reduce the inventory built up. Thus margins of the chlor-alkali producers declined affecting their profitability in this period. Sector Outlook The improvement in demand from the consuming sectors like aluminum, detergent, paper sector and increase in construction activity has raised hopes of beginning of revival in demand for chlor-alkali industry. International prices are expected to remain low due to demand supply imbalance in favour of suppliers. Thus domestic prices are expected to remain steady in the forthcoming months. The imposition of the anti-dumping duty on soda ash may improve domestic prices in the short run. Higher domestic demand and lower inventory levels is expected to improve the profitability of the domestic players. Major event The Government has imposed anti -dumping duty ranging from Rs 391 to Rs 1036 per tonne on soda ash imports from China in December. This move though belated will benefit the domestic manufacturers who were hit by rising imports and increasing inventories. This measure should enable domestic players to improve their margins and profitability. The major players that would benefit from this move are Tata Chemicals, Gujarat Heavy Chemicals and DCW. Budget expectations Indian Chemical Manufacturers Association (ICMA) has submitted detailed budget memorandum listing out various demands. It is included in the budget special at the following address: |
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