Caustic Soda Prices

The caustic soda market size was estimated at $30.27 billion in 2019 and is predicted to exceed $32.06 billion by 2026, recording a CAGR of 3.6% from 2020 to 2026. One of the major factors driving the growth of the market is the rising demand for alumina in the automotive industry. The increasing demand for paper & paperboards is also expected to increase the consumption of caustic soda, to extract aluminum from its ores, thereby augmenting the growth of the market. Energy-intensive production process and major environmental concerns are likely to hinder the market growth.

Plant capacity expansions and joint ventures in emerging and developed markets are projected to act as an opportunity for the market, in the future. Caustic soda (Sodium hydroxide) is produced while producing chlorine during the electrolysis of sodium chloride. Caustic soda is used by many important end-use industries such as chemical, paper & pulp, food, soap & detergent, water treatment, metal industry, textile, pharmaceutical, rubber industry, etc. As the product is used in various end-user industries, the demand stays stable and is growing. The product is highly consumed in the production of household products such as detergents, soaps, and cleaning products. Therefore, population growth, urbanization, rising household income, and improving economy have a positive impact on the overall caustic soda market demand.

The market is segmented into production technology types including mercury cell, membrane cell, and diaphragm cell. Mercury cell technology has witnessed substantial reduction over the past decades. This is attributed to mercury pollution tied with the production process. Additionally, mercury cell consumes much higher energy for the production of per ton of caustic soda. However, industry players are replacing mercury cell technology with more efficient and environment-friendly membrane cell technology.

Food processing applications will surpass $1.5 billion by 2026. The product is used in removing skins from tomatoes, potatoes, and other fruits. It is also used in processing edible fats and oils. Food processing business is mainly influenced by consumers’ changing habits, tastes & preferences in food, growing population, changing lifestyles, easy availability of raw materials, and globalization & trade. The demand for increasing packaged food around the world, particularly in developing countries drives the caustic soda market growth of the food processing industry.

North America has a prominent market share and expected to grow with CAGR 2.3% over the forecast timeframe. Growing production capacities coupled with high product consumption from end-use industries expected to drive the caustic soda market share in the coming years. At the global level, the demand for sodium hydroxide is high in Asia, led by China and India and North America, led by the U.S. This trend is highly associated with the prevalence of end-use industries in these regions.

China to Dominate the Asia-Pacific Region

• In Asia-Pacific, China is the largest economy, in terms of GDP. The growth in the country remains high, but it is gradually diminishing as the population ages and the economy is rebalancing from investment to consumption, manufacturing to services, and external to internal demand.
• China is the largest producer, as well as consumer of caustic soda. Additionally, the country is the largest largest pulp and paper producing nation in the world, as a result of its large forest reserves (22.5% of the land area).
• The industry is modern and highly mechanized, and the labor is cheap. Forest cover is increasing in China, owing to government afforestation initiatives. While this is a positive sign, there are concerns regarding social and environmental issues. As the largest wood importer in the world, with complex and opaque supply chains, significant challenges are also present.
• With the growth in the pulp and paper industry, coupled with the rising demand from other sectors, the consumption of caustic soda is expected to increase in the country, in the upcoming years.

Key Market Trends

• Increasing Demand from the Pulp and Paper Industry
• Caustic soda is used in the pulp & paper industry mostly for digesting wood to make wood pulp, and as a bleaching agent for neutralizing bleached pulp and paper. It is also used for deinking of waste papers.
• Caustic soda is available in solid, flake, or powder form, while its water solution is mostly used by the pulp & paper industry. Commercially, equivalent to 98% NaOH is quoted on a 76% sodium oxide (Na2O) basis.
• In Asia-Pacific, China and India are the major markets for pulp and paper production, while in Europe, Sweden and Finland accounted for approximately 60% of the European pulp production.
• In North America, there are over 110 pulp mills in the United States and Canada combined, which consume over 3 million metric ton of caustic soda per year.
• All the aforementioned factors are expected to drive the global market during the forecast period