After bottoming out in February, caustic soda prices ticked up in March and buyers are predicting more increases on the way. In Purchasing's April business survey, 38% of buyers polled said they expect caustic soda prices to increase in the next month, 11% more than predicted price hikes in March.

One reason for the buyer concern is that several of the leading caustic producers have reported plant outages or supply problems at a time (early spring) when demand usually increases. Most visibly, Dow Chemical, the world's largest producer of caustic soda, in February declared force majuere for caustic soda after a rail strike in Canada disrupted supply. Dow also increased its prices by $40/short ton for diaphragm grade and membrane grade by $50/short ton.

Steve Brien, global business director for chlor-alkalis at industry market researcher CMAI in Houston, tells Purchasing that caustic demand tends to be seasonal with a buying lull in the winter months followed by an increase in the early spring months. "As the winter season subsides, buyers and distributors are usually ready to replenish," Brien says. That annual trend coupled with the rash of unexpected plant outages, has put buyers on edge about caustic soda and given suppliers more pricing leverage in North America.

After bottoming out in February, caustic soda prices appear to be heading back up in the second quarter.

The good news is once suppliers get plants back online and the seasonal demand surge dissipates, by mid-year "we would expect the tighter caustic market to rectify itself" Brien says. "And the rise in caustic prices is not sustainable in the long-term."

Overall, less caustic soda is coming out of North America these days as more global regions increase production. CMAI reported in late 2006 that Northeast Asia is the world's largest net exporter of caustic soda (aqueous and anhydrous) in with caustic soda exports increasing at a rate of over 11% from 2001–2006. CMAI says this trend will continue for the next five years. "The Middle East will grow its net caustic export position after the next major chlor-alkali capacity increase in 2010. Conversely, North America will reduce its net caustic export position, focusing on local regional markets."