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Caustic soda demand on rise in India

Jan '12
In spite of an increase in the cost of production, the demand for caustic soda is on the rise in India due to the Government increasing the duty on its import and the sharp depreciation of Indian currency against the US dollar in recent months.

Sodium hydroxide or caustic soda is mainly used for two processes in textile manufacture – to give greater tensional strength and consistent luster, and to make the fibre more receptive to bleaching and dyeing. It is also used in the production of viscose rayon.

In India, around 9 percent of caustic soda production is consumed by the textile sector.

In Mumbai-market, caustic soda flake prices have soared from Rs. 1,185 per 50 kg in April 2011 to Rs. 1,675 per 50 kg last month.

Speaking to fibre2fashion, Mr. Viraj Mehta, Research Analyst at Equirus Securities, said, “We have seen decent demand growth for caustic soda. The industry which was at 70-75 percent utilization a year back is currently utilizing more than 85 percent of its capacity even with no new addition of capacities.”

“The cost of power constitutes about 60-65 percent of the production cost of caustic soda. As the cost of power and gas have gone up, the realization of revenues for caustic soda have also increased,” he reveals.

Mr. Mudit Jain, President, Alkali Manufacturers Association of India, adds, “The caustic soda makers are doing well as in addition to the sharp increase in the power costs, the depreciation of Indian rupee has contributed to a sharp increase in the prices as we are importing coal.”

About future scenario, Mr. Mehta opines, “I do not see softening of caustic soda prices, especially because of the strong demand.”

Fibre2fashion News Desk - India

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