Capacity cut in Alunorte alumina refinery brought down US export of caustic soda in the first two months of 2019

According to a report from Platts, the ongoing 50% capacity cut at Hydro’s Alunorte alumina refinery in Brazil has affected US caustic soda exports in the first two months of 2019. According to the latest data from the US International Trade Commission US shipments of caustic soda was down 45% YoY in the first two months of 2019.

According to the latest press update from Hydro, the company’s production volumes in Q1 2019 fell YoY, reflecting the continued Alunorte curtailment and the recent cyber-attack that disrupted production putting up a number of operational challenges, primarily in Extruded Solutions business.

The 50% capacity cut, ordered by state and federal Brazilian authorities in March 2018 after the complaint of leaks in its red mud ponds caused by rainfall continues to stay in place even now. The refinery imports about 50,000 tonnes of caustic soda every month from the US, which has dropped 50% in the first two months of 2019.  US export prices of caustic soda dropped to a low of US$320 per tonne FAS Houston.

Though Alunorte has received a green signal from the state environmental agency for production restart, they are yet to get permission from a federal court for the same and also to start the second newer bauxite residue deposit area.

The outgoing CEO Svein Richard Brandtzaeg said during the announcement that they are progressing towards a resolution of production restart at Alunorte in Brazil. However, he has not indicated any possible date for operation restart. The cyber-attack, however has not affected operations at Alunorte, according to the company.

Brazil has been the top market for US caustic soda, but, the capacity cut at Alunorte is has brought down the country’s export to Brazil. Brazil received more than 2 million tonnes of US caustic soda in 2018, down 21% from 2017.  Shipments dropped 45% YoY to 257,246 tonnes YoY in the first two months of 2019.

Caustic soda was among Chinese products on which the US imposed tariffs last year amid an ongoing trade war between the two countries. The US did not import any caustic soda from China in the first two months of 2019.

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