Will Chlor-Alkali Challenges in East India Soon Find Resolution?

India’s caustic soda industry has long revelled in self-sufficiency. Prismane Consulting’s latest chlor-alkali report suggests supply in the nation have witnessed a more than 10% leap year-on-year to reach its present levels, enough to meet domestic consumption. Cheap foreign imports, nevertheless, have always weighed on the industry, threatening margins. Several factors have managed to mitigate these casted shadows in recent years though, from countermeasures like anti-dumping duties to domestic caustic soda manufacturers augmenting their capacities. A supply jump like this has now shrunk the import share in domestic demand to below 5%, the report notes. Albeit from a small base, exports have also concomitantly risen more than 30% year-over-year, maintaining India’s trade status as a net exporter of caustic soda supplies for the third consecutive year.

This discourse, however, seeks to shed light on India's internal regional struggles. Majority of the caustic soda production facilities in the country are situated in the Western region, particularly in the state of Gujarat; strategically located there to cater to the sizeable chemical end-use industries across the belt region. Yet, this is inadequate to cater to domestic caustic’s biggest outlet: alumina production. As extensively documented in reports by industry players & associations, caustic soda demand is pretty fragmented & dispersed. Notable caustic soda applications include textiles, inorganic chemicals, soaps & detergents, and pulp & paper.

So far, new vinyl projects from oil majors like Indian Oil Corporation (IOC) in the region has managed, although only up to a limited extent, offset the chlorine deficit. An issue like this would only become more pronounced with inaccessible & insufficient caustic supply against a backdrop of growing alumina demand, in line with the global trends.