Plummeting demand and ample supplies have left industry players searching for the bottom of Asia’s caustic soda market, ahead of the 13th Asian Chlor-alkali Conference, which starts on Thursday. The downbeat sentiment marked a sharp turnabout from a year ago, when caustic soda prices were en route to hitting record highs, in August, of over $600/dry metric tonne (dmt) (€426/dmt) FOB (free on board) NE (north east) Asia. Prices have since fallen by over 70% to $150-180/dmt FOB NE Asia last week, as assessed by global chemical market intelligence service ICIS pricing. “The question is how far lower (caustic soda) prices will go. Since May, people have been saying prices have bottomed out. Well, they are still falling,” said a caustic soda buyer. Salt, electricity and chorine values are the main factors that determine the price at which chlor-alkali producers are willing to sell caustic soda. As salt and electricity prices have remained relatively stable over the past few months, it is the price of chlorine-- a co-product of the chlor-alkali manufacturing process-- which is causing most concern among market players. “As long as chlorine values continue to rise, there is no reason why buyers should be paying more for caustic soda,” said another caustic soda buyer. Chlorine is usually sold as a derivative product, most often as polyvinyl chloride (PVC). Asian PVC prices have risen by 23% since the start of the year to over $800/tonne CFR CMP (China main port), data from ICIS pricing showed. Since most chlor-alkali producers base their bottom lines on the combined margins of their chlorine and caustic soda businesses, higher PVC prices should translate to easing upward pressure on caustic soda prices, buyers said. Chlor-alkali producers, however, pointed to rising PVC feedstock costs as justification for firm caustic soda values. The high prices of ethylene in particular have chipped away at their margins, forcing operating rate cuts, said a chlor-alkali producer. “Some of the producers are only running their plants at 70-80%. If things remain this way, we will have to cut rates further,” said a northeast Asian producer. Opinions over the market supply outlook were similarly divided. Producers claimed that their inventory levels were falling but these were countered by buyers’ claims that aggressive offers remained widely available in the market. Adding to the confusion is the recent emergence in Asia-Pacific of rare deep-sea cargoes, particularly from the US Gulf. Because northeast Asian producers have been selling large quantities to US buyers over the past two years, a reversal in trade flow could shut an important export outlet for Asian sellers, industry sources said. The difference in market outlook between buyers and sellers had manifested itself as a stalemate in semi-annual contract negotiations, which was previously settled at $395/dmt FOB NE Asia. Conclusions at $165/dmt FOB NE Asia and $180/dmt FOB NE Asia were heard reached in recent weeks but have not gained widespread acceptance yet. “Hopefully the situation will become clearer over the next two days (with negotiations taking place at the conference sidelines). If not, I guess buyers would not mind waiting a while longer in a falling market,” a market player said. The two-day conference, organised by ICIS and Tecnon OrbiChem, will end on Friday.