The distribution of Caustic Soda production areas in China is similar to most industrial products, with two main characteristics: close to the origin of raw materials or close to consumption areas. As of the end of 2022, China's caustic soda production capacity was 47.63 million tons, with a production capacity of 39.81 million tons, a capacity utilization rate of 83.6%, and an apparent consumption of 36.56 million tons.
For a long time, the Chinese caustic soda market has shown a trend of synchronous growth in supply and demand, and the quality of industry development has steadily improved. At the same time, it also possesses the characteristics of "north to south, west to east" domestic trade, long-term oversupply and export oriented foreign trade, and industrial characteristics of uniform distribution of enterprises and sufficient market competition. Due to the co production of caustic soda and chlorine gas, there is a characteristic of "no separation of chlor alkali", and the industry in which the two are located is generally referred to as the chlor alkali industry in spot goods.
market development
From 2010 to 2022, the development of China's caustic soda and chlor alkali industries experienced a process of rapid development, slow growth, and steady improvement. The specific situation is as follows:
(1) From 2010 to 2014, the chlor alkali industry was in a stage of sustained recovery and rapid development. During this period, the average annual growth rates of caustic soda production capacity and output were as high as 6.7% and 11.1%, respectively. The average annual growth rate of apparent consumption was 11.4%, and production and sales were thriving.
(2) In 2015, under the policy guidance of structural adjustment, the new construction and expansion of the industry became more rational, while the exit speed of survival of the fittest and outdated production capacity accelerated according to market rules. In terms of data, the production capacity and growth rate of caustic soda in 2015 were -3.9% and -4.8% respectively, and there was also a decrease of -4.3% in demand. During this period, the chlor alkali industry suffered continuous losses and entered a cold winter period.
(3) From 2016 to 2022, the supply side reform policy of the industry was fully implemented, and companies with weaker competitiveness gradually withdrew from the market. The quality of production enterprises improved, and the industry's production capacity grew at a low speed. The role of supply side reform was initially evident. During the same period, with the continuous development of the national economy, the demand for downstream chlor alkali industries has steadily increased, and major downstream application industries such as real estate and building materials have recovered. The market supply and demand relationship has gradually improved.
Industrial pattern
The distribution of caustic soda production areas in China is similar to most industrial products, with two main characteristics: close to the origin of raw materials or close to consumption areas. As of the end of 2022, China's caustic soda production capacity was 47.63 million tons, with a production capacity of 39.81 million tons, a capacity utilization rate of 83.6%, and an apparent consumption of 36.56 million tons.
(1) Production capacity and regional distribution of production
In 2022, the North China region had the highest production capacity and output distribution of caustic soda plants, accounting for 34.5% and 35.2% of the national total, respectively. The Northwest and East China regions ranked second and third. Among the above regions, North China and East China are both concentrated in production and sales, with strong downstream demand for caustic soda. Among them, the downstream alumina industry in North China is relatively concentrated, while the downstream textile printing and dyeing, paper making industries in East China are relatively developed. The northwest region has gained significant production cost advantages with abundant resources such as raw salt and coal. In recent years, there has been a significant increase in production capacity. However, when underground demand is insufficient to absorb all production capacity, the production of solid alkali is generally transported to regions such as Southwest, East China, and South China.
Specifically, in terms of the number of enterprises, production capacity, and output, Shandong Province ranks first in the country. In 2022, the production capacity of caustic soda reached 11.96 million tons, accounting for 25.1% of the total production capacity of caustic soda in China. It is truly a major province in caustic soda production, with 33 enterprises; Secondly, in Jiangsu Province, the production capacity of caustic soda reached 4.175 million tons in 2022. Due to environmental regulations and capacity reduction, the production capacity in Jiangsu Province has slightly decreased in recent years, with 16 enterprises; Inner Mongolia ranks third, with a caustic soda production capacity of 3.93 million tons in 2022. In recent years, due to advantages in raw materials and other costs, the production capacity has increased significantly, with 11 enterprises. The total production capacity of caustic soda in the above three provinces accounts for 42.1% of the total production capacity in China.
In fact, not only caustic soda, but also the production capacity of polyvinyl chloride (PVC) is mainly concentrated in Shandong and Shaanxi, Inner Mongolia, Xinjiang, and other places. The overall layout of the chlor alkali industry basically presents a bipolar pattern dominated by the eastern coastal and northwestern regions. This is mainly due to resource endowment and location characteristics. The cost advantages of raw materials such as coal and calcium carbide in the northwest region are obvious, while the eastern coastal region has obtained excellent advantages in crude oil import (such as ethylene and monomer methods) relying on ports, and is the main consumer market for chlor alkali products.
(2) Consumption structure and regional differences
In the downstream demand field of domestic caustic soda, the alumina industry accounts for the largest proportion, and the consumption proportion of caustic soda is basically stable at around 30%. In 2022, the demand for caustic soda in the alumina industry is 10.857 million tons, accounting for 29.7%; Next are industries such as printing and dyeing, chemical fiber, chemical engineering, Water Treatment, papermaking (pulp), light industry (excluding papermaking), pharmaceuticals, lithium battery, etc.
From the perspective of regional distribution, the largest demand for caustic soda in North China in 2022 was 13.044 million tons, accounting for 35.7%; The demand for caustic soda in East China is the second, with 8.795 million tons, accounting for 24.1%; The demand in South China and Central China ranks third and fourth, with 5.07 million tons and 3.825 million tons, respectively, accounting for 13.7% and 10.5%. At the same time, there are significant differences in the demand structure for caustic soda among different regions. For example, Shandong, Shanxi, Guangxi, Henan, and Guizhou are provinces with concentrated alumina production, among which Shandong, Shanxi, and Guangxi all rank among the top three provinces in terms of caustic soda demand nationwide. Driven by the demand in the alumina industry, the total demand for caustic soda in the three provinces is 13.637 million tons, accounting for 37.3% of the total demand for caustic soda. The printing and dyeing and chemical fiber industries are mainly concentrated in Zhejiang, Jiangsu, Jiangxi, Xinjiang, and Sichuan, while the chemical industry is mainly concentrated in Shandong, Jiangsu, Guangdong, Hebei, and Jiangxi provinces.
(3) Domestic trade pattern
The main production and sales areas of domestic caustic soda are not completely consistent and need to be adjusted through trade. Specifically, Shandong and the four northwest provinces (Shaanxi, Inner Mongolia, Ningxia, and Xinjiang) are the main areas of net outflow of caustic soda, while Shanxi, Hebei, Guangdong, and Guizhou are the main areas of net inflow of caustic soda. Shandong Province is also the largest production and sales region in China, with slightly oversupply, making it a net outflow destination. There are generally fewer downstream caustic soda in the western region, and most of the local liquid caustic soda needs to be processed into solid caustic soda for long-distance export, so it is mainly transferred out. Overall, the domestic trade of caustic soda in China presents a pattern of "from west to east and from north to south".
(4) Foreign trade
In terms of foreign trade, China has maintained its status as a net exporter of caustic soda for a long time. From 2010 to 2020, China's exports of caustic soda increased first and then decreased. In 2022, the export volume reached a historic high of 3.26 million tons, accounting for 3% of the apparent consumption that year. From the perspective of export product types, from 2010 to 2022, the annual export volume of solid caustic soda remained relatively stable, basically maintaining at 400000 to 700000 tons. The fluctuation in the export volume of liquid caustic soda is greater, which is the main factor affecting the total export volume of caustic soda.
