# Caustic soda and Paper and packaging

Caustic soda is one of the two active chemicals in kraft pulping liquor; mills recover most of it but must buy make-up, about 35 kg per tonne of market pulp, so virgin-fibre pulp is a steady caustic buyer whose supply depends on chlorine and PVC demand. In India, where three quarters of paper is made from recycled fibre, paper takes only about 6% of caustic demand.

Source page: https://www.materialinsights.org/links/caustic-soda-and-paper-and-packaging/

[Caustic soda](https://www.materialinsights.org/chemicals/caustic_soda/) (chemical) and [Paper and packaging](https://www.materialinsights.org/industries/paper_packaging/) (industry): 3 relationships.

## How they are linked

### 1. Make-up chemical for pulping

*Physical flow · Strong · Caustic soda → pulp and paper mills*

Chemical pulp mills lose some sodium in each pass of the cooking liquor and replace it with bought caustic soda; market pulp producers rate this input 4 of 5 on criticality and integrated virgin-fibre mills 3 of 5.

- **about 35 kg** caustic soda needed per tonne of market pulp
- **80%** chemical pulp's share of caustic soda used in pulp and paper
- **4 of 5** highest criticality, for market pulp producers

Kraft pulp takes over 90% of the caustic used by chemical pulps, and China and the United States are the largest consumers, with Brazil, Canada and Indonesia also significant. Mills that make paper from recycled fibre use far less, so the link is much weaker in India, where 74 to 76% of paper is made from recycled fibre and pulp and paper took about 5.75% of caustic demand in 2022-23.

Enterprise types that depend on it:

- Market pulp producers: cooking liquor make-up (criticality 4 of 5)
- Integrated virgin-fibre paper and paperboard mills: pulping (criticality 3 of 5)

Sources: [Material Insights](https://www.materialinsights.org/industries/paper_packaging/materials/); [ResourceWise (Fisher International)](https://www.resourcewise.com/forest-products-blog/caustic-soda-consumption-pulp-and-paper-what-you-need-to-know); [Indian Chemical News](https://www.indianchemicalnews.com/chemical/amai-domestic-demand-for-caustic-soda-up-by-42-to-4138-lakh-mt-in-2022-23-19793); [Indian Paper Manufacturers Association](https://ipmaindia.org/overview-2/)

### 2. Recovered in the kraft liquor cycle

*Physical flow · Medium · White liquor → pulp → recovered sodium hydroxide*

Kraft white liquor is a solution of sodium hydroxide and sodium sulphide; the spent black liquor is burnt in a recovery furnace, leaving a molten smelt of the inorganic chemicals, and quicklime turns the dissolved smelt back into white liquor, so most caustic is regenerated on site.

- **over 80%** kraft's share of US chemical pulp output

Because the cycle is closed, a kraft mill's caustic purchases are small relative to the alkali it circulates, and they rise when the recovery furnace or causticising plant underperforms. Kraft accounts for over 80% of US chemical pulp, so this cycle sets the pattern for most chemical pulp mills.

Sources: [US Environmental Protection Agency](https://www.epa.gov/sites/default/files/2020-10/documents/c10s02.pdf)

### 3. Supply set by chlorine and PVC

*Cost and price · Asymmetric · PVC and chlorine demand → caustic supply and price for mills*

Caustic soda comes out of the same cells as chlorine, so its output follows chlorine demand, mostly for PVC, rather than paper demand; mills are price takers.

In early 2025 weak PVC demand reduced chlorine output and tightened caustic supply, raising prices in several regions even though pulp and paper demand stayed steady. The same mechanism runs the other way when chlorine output is high and caustic is in surplus, so pulp mills' chemical costs depend on construction demand elsewhere.

Sources: [ResourceWise](https://www.resourcewise.com/blog/understanding-the-caustic-soda-shortage-the-downstream-impact-of-weak-pvc-demand)

## For investors

### Key learnings

1. Caustic is a modest but unavoidable cost for kraft pulp, about 35 kg per tonne of market pulp, because mills must replace the sodium lost from the liquor cycle.
2. Caustic supply follows chlorine and PVC, so pulp producers' chemical costs can rise in a construction slowdown, as in early 2025.
3. Recovery boiler and causticising performance decide how much make-up a mill buys, so mill reliability matters as much as the caustic price.

### What to track

- **Caustic soda contract and export prices (US Gulf, NE Asia)**: Cost pressure on chemical pulp producers (Monthly · Argus, ICIS, S&P Global)
- **PVC operating rates and prices**: Leading signal for caustic availability (Monthly · Argus, China Chlor-Alkali Industry Association)
- **Hardwood and softwood pulp prices**: Whether pulp producers can pass on chemical costs (Weekly · Fastmarkets FOEX)

## For policymakers

### Key learnings

1. Pulp and paper took only about 5.75% of India's caustic demand in 2022-23, far behind textiles and alumina, so paper is not the swing buyer at home.
2. India's paper industry is about 74 to 76% recycled fibre and only 18 to 20% wood-based, which keeps its caustic needs low; any growth in wood-based pulping would raise them.
3. India has become a net exporter of caustic soda, so supply risk for domestic paper mills is low, but prices still move with chlor-alkali output set by chlorine and PVC demand.

### What to track

- **Caustic soda demand, capacity and sector shares**: Balance of domestic supply and the paper sector's share (Yearly · Alkali Manufacturers Association of India)
- **Wood-based versus recycled-fibre paper output**: How much kraft pulping, and caustic demand, grows at home (Yearly · Indian Paper Manufacturers Association)

## India

India's caustic demand was 43.56 lakh t in FY2023-24 against capacity of 57.85 lakh t, and it has become a net exporter; pulp and paper took about 5.75% of demand in 2022-23, and only 18 to 20% of Indian paper is wood-based.

## Sources

1. [Paper and packaging: materials and inputs](https://www.materialinsights.org/industries/paper_packaging/materials/), Material Insights (2026)
2. [Caustic soda consumption in pulp and paper: what you need to know](https://www.resourcewise.com/forest-products-blog/caustic-soda-consumption-pulp-and-paper-what-you-need-to-know), ResourceWise (Fisher International) (2023)
3. [AP-42 Section 10.2: Chemical wood pulping](https://www.epa.gov/sites/default/files/2020-10/documents/c10s02.pdf), US Environmental Protection Agency (1995)
4. [Understanding the caustic soda shortage: the downstream impact of weak PVC demand](https://www.resourcewise.com/blog/understanding-the-caustic-soda-shortage-the-downstream-impact-of-weak-pvc-demand), ResourceWise (2025)
5. [AMAI: Domestic demand for caustic soda up by 4.2% to 41.38 lakh MT in 2022-23](https://www.indianchemicalnews.com/chemical/amai-domestic-demand-for-caustic-soda-up-by-42-to-4138-lakh-mt-in-2022-23-19793), Indian Chemical News (2023)
6. [Caustic soda demand grew by 5.3%, soda ash by 4% in FY 2023-24: AMAI](https://www.indianchemicalnews.com/chemical/lite/caustic-soda-demand-grew-by-53-soda-ash-by-4-in-fy-2023-24-amai-24335), Indian Chemical News (2024)
7. [Indian paper industry: overview](https://ipmaindia.org/overview-2/), Indian Paper Manufacturers Association