Caustic soda: Cycles

When PVC booms, caustic busts

What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

Caustic soda prices are set by the gap between chlorine-driven supply and alkali demand. Strong PVC demand pushes chlor-alkali rates up and floods caustic; weak PVC cuts rates and tightens caustic. Energy shocks add a cost push from the marginal European producer. Alumina is the swing buyer. The floor is roughly the cash cost of a Chinese or US producer who must place chlorine somewhere; the ceiling appears when European rates are cut and alumina refiners curtail, as in 2022.

The spread to watch ECU netback minus cash cost

ECU value = chlorine netback + 1.128 x caustic price. With chlorine near zero in Asia, a NE Asia caustic price of $380-395/dmt gives an ECU of about $430-445, close to cash cost for higher-cost plants (Argus Nov 2025).

Booms and busts

2021-2022
Europe's power shock cut chlor-alkali rates to about 70%; US exporters sold into Europe and Latin America; caustic hit multi-year highs.
US Gulf fob about $775/dmt (Aug 2022) to $850 (Oct 2022); NW Europe contract $1,241-1,321/dmt (Argus Aug 2022)
2023-2024
Prices fell as European rates recovered, Chinese capacity grew and pulp demand softened. Indian prices fell then rose into early 2025.
Dahej domestic $0.416/kg in June 2024 rising to $0.493/kg in January 2025 (Alchempro)
2025
Chinese additions and weak PVC pushed Asian prices down; India fell back.
Dahej $0.411/kg (Aug 2025); NE Asia fob $380-393/dmt, US Gulf export $390-440/dmt, India domestic Rs 35,000-36,000/dmt (Oct 2025, Argus)
2026
US diaphragm closures and maintenance expected to firm prices; record US exports; Europe under pressure.
Argus forecast for March 2026: US Gulf fob $425/dmt, NE Asia fob $395/dmt, NW Europe contract $760/dmt

What drives the cycle

PVC demand. sets chlor-alkali run rates and so caustic supply
Alumina output. the largest single alkali buyer; refinery cuts like Rio Tinto Yarwun (1.2 Mt/yr from Oct 2026) weaken demand
Power prices. set marginal cost in Europe and Japan
Trade measures and freight. Mexico's $195/dmt duty on US caustic and US tariffs that stopped over 350,000 dmt from NE Asia to the US West Coast reroute flows

Metrics to track

Metric	Why it matters	Where to track it
Caustic fob US Gulf and NE Asia	global export benchmarks	Argus, ICIS, S&P Global
China 32% and 50% ex-works caustic, operating rate	China sets Asian supply	Mysteel, SunSirs, Argus
Indian domestic ex-works (Dahej) price	Indian buyer benchmark	Chemical Weekly, Alchempro
Alumina output	largest buyer	International Aluminium Institute