Caustic Soda: Tackling the Price Surge Challenge

Explore the challenges posed by the caustic soda price surge, affecting industries worldwide. Understand its causes, impact, and strategies for resilience in the face of this volatile market condition.

July 12, 2022

In water treatment plants, caustic soda is the prime element used to neutralize the pH balance in the water. The application of this valuable chemical substance is vast as it is used almost in every cleaning process. Sodium hydroxide is the leading scientific name for this substance. 

The use of Sodium hydroxide is immense in the paper industry. This chemical substance helps tie the knots of fibres in lignin, the robust fibre used to make high-quality papers. The application of Sodium hydroxide in the oil-producing industry is also vast. It helps to separate fatty acids from the oil.

However, with rising caustic soda prices, the production of allied products can interrupt hugely. Multiple factors worked together behind this hike. The cost of caustic soda in Dubai is the cheapest. Thus, production units are purchasing this material from there. 

The sudden price change of Sodium hydroxide has driven the attention of the industrialists, especially from the paper and textile industry. To discuss this, you have to know the quality of the Sodium hydroxide depends on the procedure of making it. You have to pay a higher price if you prefer high-quality Sodium hydroxide. 

Apart from the quality, three main factors affect the price. Let’s discuss these factors here. 


Factor 1: a wide gap in demand and supply 

In general, the price of a commodity would spike if the gap between demand and supply is wide. In other words, equal or balance between the supply and the demand sides can only ensure a stable price for any commodity. In this case, the demand is increased, but the production output is decreased, which results in a price hike. 

1. Many companies in the USA producing Sodium hydroxide have lowered their production.

2. Some of the companies also chose to shut down due to low demand in the market. 

3. In India, the need for Sodium hydroxide in the chemical industry and other reloaded industries is also common. 

4. In the European market, the companies that require Sodium hydroxide as a raw material for their production system have maintained the status quo. 

5. Ultimately, the sluggish demand for Sodium hydroxide has forced the production companies to stop producing it further. 

After a while, the demand for Sodium hydroxide is now at its peak, but the production of Sodium hydroxide remains low. Therefore, the material's price is now increased to the highest level. 

Factor 2: low production of salt

Salt is the main element that is required to produce Sodium hydroxide. The process is straightforward as the saltwater passes through a brine filled with electric energy. In other words, with the support of an electric current, the saltwater can emit Sodium hydroxide. 

1. Therefore, salt production is directly related to the production of Sodium hydroxide.

2. Due to specific reasons, salt production in India reached the lowest in about a quarter. 

3. Hence, Sodium hydroxide output was more bass, creating a shortage of supply. 

The low production of salt has significantly disrupted the process of making Sodium hydroxide.  It has widened the gap between supply and demand, resulting in a price spike. 

Factor 3: disruption in supply chain 

 Finally, the sluggish movement of vessels in the oceans is another main reason for the late delivery of raw materials. Indirectly, this creates a temporary crisis in the market and thus increases the price for a short period. 

Finally, you should always consider purchasing Sodium hydroxide from the top suppliers to ensure the smooth running of your production system. 

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