After the domestic Caustic Soda market hit a high price of over 5000 yuan (32% ion exchange membrane, ton price, the same below) in October 2021, the caustic soda market gradually returned to rationality. After a steady consolidation throughout the year 2022, as of March this year, the mainstream transaction price in China has not significantly changed from the beginning of 2022, adjusted to approximately 2600 yuan.
The changes in the caustic soda market mainly stem from changes in consumer structure. In recent years, the rapid development of the new energy vehicle industry has led to an increase in the proportion of indirect consumption of caustic soda converted into intermediate products within caustic soda enterprises, and a decrease in the proportion of bulk consumption of downstream traditional products, which are the main reasons for the change in caustic soda consumption structure.
Rapid growth in new energy consumption
In recent years, benefiting from the popularity of the new energy vehicle track, the ternary precursor industry has ushered in a period of high light. In its industrial chain, caustic soda is indispensable as an auxiliary material, and the booming new energy industry is driving the growth of demand in the caustic soda market.
According to information, the lithium battery industry accounts for about 5.2% of downstream consumption of caustic soda, and it is expected to gradually increase to nearly 7% from 2023 to 2025. Although lithium batteries (ternary precursors) are not the main downstream field of caustic soda, their own growth trend and high alkali consumption characteristics have attracted more and more attention and concern from the caustic soda industry. At the same time, in the consumption of caustic soda, the consumption of ternary precursors per ton of caustic soda is as high as about 1 ton (equivalent to 100%), becoming the most significant increment downstream of caustic soda in recent years.
The indispensable new energy battery recycling and processing end in the future will also drive the rapid growth of demand for caustic soda. In order to reduce industrial chain costs and improve production and sales efficiency, enterprises with large chlor alkali production capacity are planning to build lithium battery recovery projects nearby. In the Pingdingshan area, combined with the annual production of over 500000 tons of chlor alkali plants in Pingmei Shenma, a lithium battery recovery project is planned to be constructed. After completion, more than half of the caustic soda production capacity of chlor alkali enterprises can be digested on-site. In the future, the new energy industry will become an industry with rapid growth in demand for caustic soda.
Increased proportion of indirect consumption
Due to the unfavorable nature of caustic soda for long-distance transportation, especially the high cost of transportation by car, the characteristics of regional development of caustic soda have become increasingly evident in recent years. The layout of the entire chlor alkali industry has basically presented a bipolar pattern dominated by the eastern coastal and northwestern regions, mainly due to resource endowment and location characteristics. The cost advantage of chlor alkali raw materials such as coal and calcium carbide in the northwest region is obvious, while the eastern coastal region has obtained excellent import advantages through ports (such as ethylene and monomer methods), and is the main consumer market for chlor alkali products. The layout of the chlor alkali industry belt with different growth paths and development characteristics is relatively clear.
Affected by regionalization, the proportion of enterprises in various regions achieving their own supporting consumption is also expanding. By 2021, 20% of domestic enterprises have supporting caustic soda downstream products. With the rise of Titanium Dioxide and lithium battery industries in recent years, some domestic titanium dioxide and lithium battery leading enterprises have successively built their own chlor alkali supporting devices from the perspective of supporting projects such as waste salt treatment and lithium battery recovery, realizing self production and self use, turning caustic soda into intermediate products, and reducing the circulation of market commodities. It is expected that there is still a possibility of further expansion of the indirect consumption proportion of caustic soda in the future.
Traditional consumption has shrunk
Statistical information shows that the production capacity of caustic soda in 2022 is about 47.29 million tons, among which alumina consumption has maintained a consumption proportion of over 1/3, occupying the first place in traditional consumption. Due to the fact that both soda ash and caustic soda are consumers of alumina, their consumption and usage ratio are greatly influenced by the prices of soda ash and caustic soda. In 2023, Yuanxing's new natural alkali projects will gradually reach production, and the domestic production capacity of soda ash will significantly increase. If the price of soda ash drops due to this impact, the proportion of caustic soda consumed in the alumina industry may shrink.
Printing and dyeing, as well as chemical fiber, which are both traditional consumption fields of caustic soda, belong to high pollution and energy consuming industries. Due to policy constraints and the peak of integration, the consumption of caustic soda is shrinking. Due to process adjustments, the demand for caustic soda in the paper industry will also decrease in the future.
In recent years, the export of caustic soda has maintained a rapid growth momentum, which has played a significant supporting role in domestic consumption. The changes in the international situation will inevitably affect the future growth of domestic consumption, thereby causing interference to the domestic market.
Based on the above viewpoints, industry experts believe that the domestic consumption structure of caustic soda may quietly change after 2023. It is recommended to focus on four changes: firstly, whether the release or tightening of traditional downstream demand such as alumina will cause a staged mismatch between caustic soda supply and demand. The second is the impact of the growth rate and increment of demand for caustic soda in the field of new energy lithium batteries. Thirdly, will the growth rate of domestic caustic soda self supporting enterprises continue to expand. The fourth is whether the impact of the global economic recession will lead to a contraction in exports.
