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The global caustic soda market size was USD 44,959.2 million in 2019 and is projected to reach USD 55,557.7 million by 2027, exhibiting a CAGR of 3.1% during the forecast period.
Caustic soda is a crucial building block for a host of important items, such as plastics, pharmaceuticals, and additives for water treatment. It is generated by the electrolysis of sodium chloride solution using one of the cell types, such as diaphragm cell and membrane cells. The pulp and paper, detergent, alumina, oil and gas, textile, and chemical industries are the main consumers of the market.
COVID-19 Pandemic May Hamper Caustic Soda Production Owing to Reduced Workforce
The COVID-19 pandemic has impacted the global market. Various initiatives undertaken to deal with the pandemic could save lives, such as lockdowns, the collapse of trading practices, and the closure of multiple factories and workplaces in many countries. But they have wide-ranging economic consequences. Along with the possibility of global growth slowing down, the impacts of COVID-19 are reaching economies in different sectors around the globe. In reaction to the lockout directives given by the government of these countries and the closure of public transport services in many locations across the globe, main development segments have begun to shut down.
Also, the risk of transmission of COVID-19 has reduced workforces in factories and has also decreased the supply and plant ability. As per the United Nations Conference on Trade and Development (UNCTAD) forecast, due to the contraction of the manufacturing sector, coupled with factory shutdowns, the COVID-19 outbreak could cause worldwide foreign direct investment (FDI) to reduce by 5% to 15% by March 10, 2020. The unwanted effects of this pandemic on FDI investment in the chemical manufacturing sector are projected to be significantly substantial.
The market’s demand was impacted by the coronavirus. It is used in industrial activities such as water treatment, pulp and paper, and chemical manufacturing. It is also used to make soaps, detergents, soft tissues, absorbent materials, and cleaning supplies. Its demand began weakening in other sectors around May, as refineries and pulp and paper manufacturing facilities lowered their production. It is also used in alumina refining, which was reduced due to a slowdown in automobile and aircraft manufacturing.
In the first half of February 2020, new vehicle sales in China declined by about 92% and are expected to decline by at least 2.9% by the end of 2020. According to the European Automobile Manufacturers’ Association (ACEA), in January and February 2020, the total sales of new vehicles in the European Union were 7.4% lower than those in the same period in 2019. During the first quarter of 2020, each of the following four main European Union economies encountered weakening demand: Germany by 9.0%, Italy by 7.3%, France by 7.8%, and Spain by 6.8%. The National Association of Automobile Manufacturers of South Africa (NAAMSA) reports that South Africa's automotive industry, which accounts for about 7% of the GDP of the country, is experiencing a significant decline in sales.
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Increasing Water Scarcity across the Globe to Boost Growth
Caustic soda is a commonly used water treatment chemical that raises the pH of water by absorbing water and carbon dioxide. Water scarcity, extreme water stress, and strict legislation to regulate contamination in water bodies would drive the global market growth. Water shortage is one of the major problems of the 21st century, according to the Food and Agriculture Organization of the United Nations. It affects not only human health and the environment but also local economies that rely on businesses, industries, and agriculture for water. Such facts add up to an increasing need for efficient water and wastewater treatment facilities, but it can take years for new plants to be planned, funded, approved, installed, and commissioned. The costs can be debilitating.
Rising Demand for Alumina to Drive Caustic Soda Market Growth
Caustic soda is closely related to the alumina industry. It is used to refine raw bauxite into the white power alumina that is then smelted to make aluminum. According to the International Aluminum Institute, the total alumina production for 2019 is 131,910 thousand metric tons. Major markets of aluminum are building & construction, transportation, and containers & packaging. The use of aluminum presents a great potential for increasing the sustainable use of energy. The lightweight aluminum, for instance, leads to improved fuel economy in cars ranging from cargo to passenger.
The U.S. government set higher Corporate Average Fuel Efficiency (CAFE) requirements in August 2012, mandating an average fuel economy for the model year 2025 of 54.5 miles per gallon. Since the use of aluminum offers manufacturers substantial weight savings, several automotive producers are now switching to aluminum to meet these objectives.
In improving the fuel economy, hybrid cars are now at the forefront. In 2013, Phinergy, an Israeli developer of metal-air energy systems, developed an aluminum-air battery that has the capacity to power an electric car for 1,000 miles. In the construction industry, the potential of aluminum to reflect 95 percent of solar energy lowers the cost of cooling buildings substantially. Thus, the above factors would boost the demand for aluminum, which, in turn, is likely to accelerate the demand for this type of soda during the forecast period.
Expansion of the Chemical Industry to Favor Growth
Caustic soda is a very widely used chemical in numerous applications. In the manufacturing of many valuable organic chemicals, it constitutes an important reactant and is a feedstock in the production of a wide variety of chemicals. In the production processes of pharmaceuticals, solvents, inks, fabrics, dyes, synthetic fibers, herbicides, coatings, adhesives, and bleach, it is used as an intermediate and a reactant. It is also used for the neutralization and scrubbing of acid waste sources.
The conversion or saponification of vegetable oils, tallow, and fat in the production of surfactants for detergents and soaps are other applications of the product. It is used to extract acidic compounds from gases and hydrocarbons in the natural gas and petroleum industries. At the same time, it is used in the dying of synthetic fibers and chemical processing of cotton in the garment industry. It is also used in medicinal compound synthesis, the recycling of rubber, and the neutralization of acids. Thus, the high demand for organic chemicals in developing countries such as India and China is likely to boost the need for caustic soda during the forecast period.
Highly Corrosive Nature to Hamper Growth
Sodium hydroxide reacts with aluminum, tin, copper, zinc, and their alloys with the production of hydrogen and can thus form explosive gas mixtures. It also reacts with materials such as chlorinated compounds, oxidizers, organic molecules, and nitro compounds. The reaction of the chemical with ammonium and amine compounds can also release toxic substances.
If humans or animals are exposed to it, the highly corrosive character of the caustic constitutes the key threat. Its contact with eyes may cause irreversibly severe damage if there is no immediate treatment. Concentrated ingestion can result in significant damage to the mucous membranes and all other tissues that are exposed to the substance. Thus, its corrosive nature can affect human life, and its high chemical reactivity can release toxic gases, thereby affecting the environment, which, in turn, would hamper the market growth.
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Organics Segment to Lead Stoked by Increasing Usage in Production of Chemicals
On the basis of the application, the key market is segmented into organics, alumina, soaps, water treatment, food, inorganics, paper & pulp, and others. In the development of many useful organic chemicals, processing of inorganic chemicals such as paints, glass, and ceramics, caustic soda is often used. It is also used in the production of fuel cells and cosmetics.
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In addition to being used in the manufacturing of industrial soaps and special soaps, it plays an important role in the manufacturing of soap powders, soap bars, and detergents. Developing countries are experiencing high demand because bar soap is primarily used for washing fabrics and personal hygiene in some of these countries. These unique products include soaps for cleaning ovens and food preparation equipment, more powerful dishwasher detergents, floor cleaning, metal cleaning, paint removers, liquid soaps, and shampoos.
Asia Pacific Caustic Soda Market Size, 2019 (USD Million)
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The market size in Asia Pacific stood at USD 25,280.17 million in 2019. The region dominated the global market and is likely to maintain its position during the forecast period, backed by high consumer expenditure, rising interest rates, construction work, expanding chemical industry, and government subsidies. These are some of the important components of GDP. Also, the growing chemical industry is likely to drive the market.
China accounted for more than 60% share of the Asia Pacific market in 2019. The expansion of end-use industries is set to drive the market in this country during the forthcoming years. India has a large number of chemical manufacturing bases, which, in turn, would drive the caustic soda market in the country. Aditya Birla Chemicals (India) Limited and Gujarat Alkalies and Chemicals Limited are the major manufacturers in India. Using the new membrane technologies through three plant sites, ABCIL generates high-quality lye and flakes. In alumina refineries, for the manufacturing of soaps and detergents, and in paper and textile industries, lye and flakes are commonly used. They are also used in the chemical manufacturing industry as a basic feedstock for a variety of downstream products.
North America and Europe together accounted for more than 25% of the global market in 2019. Manufacturers in the U.S. have switched to membrane technology from the mercury cell or diaphragm process. Due to the growth in exports to Latin America and Africa, U.S.-based producers are anticipated to find lucrative opportunities. Olin Company, Westlake Chemical, Shintech, and Occidental Petroleum Chemical are some of North America's main producers.
The main factors driving the demand are increasing manufacturing bases, rising consumer disposable incomes, and improving living standards in emerging economies such as Brazil and Mexico. Furthermore, in Latin America, there is a substantial development in the automotive industry, which would positively affect the demand.
Strategic Planning Adopted by Companies to Strengthen their Market Shares
The market is fragmented in nature with the presence of various major players and some global and regional small-and-medium-sized players worldwide. Many companies are competing on the basis of the offered product quality and the technology used for the manufacturing. Most of these players are focusing on investing in research and development activities, broadening manufacturing facilities, developing their existing infrastructures, and acquisitions. They are looking for opportunities to integrate vertically across the value chain.
An Infographic Representation of Caustic Soda Market
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The caustic soda market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, products, and applications. The market includes insights into market trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors that have contributed to the growth of the market over recent years. It includes historical data & forecasts revenue growth at global, regional, and country levels, and analyzes the latest market dynamics and opportunities in the industry.
Value (USD Million) and Volume (Kilo Tons)
Fortune Business Insights says that the global market size was USD 44,959.2 million in 2019 and is projected to reach USD 55,557.7 million by 2027.
In 2019, the Asia Pacific market value stood at USD 25,280.17 million.
Registering a CAGR of 3.1%, the market will exhibit steady growth in the forecast period (2020-2027).
The organics segment is expected to lead this market during the forecast period.
The rising demand for alumina is a key factor driving the market growth.
Occidental Petroleum Corporation (OXY) (U.S.), Formosa Plastics Corporation (Taiwan), Olin Corporation (U.S.), PPG Industries (U.S.), Xinjiang Zhongtai Chemical Company Limited (China), and Hanwha Chemical Corporation (South Korea) are the major players in the global market.
Asia Pacific dominated in terms of market share in 2019.
The rising demand from the chemical industry is expected to drive the adoption of the product.
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