The European caustic soda market is expected to register a CAGR of over 3% during the forecast period. The major factors driving the market studied are the rising demand for alumina in the transport sector and increasing demand for paper and paperboards. On the flip side, unfavorable conditions arising due to the COVID-19 outbreak, energy-intensive production process, and environmental concerns are hindering the growth of the market.
- The organic chemicals segment is expected to dominate the European caustic soda market over the forecast period.
- Germany is likely to represent the largest market over the forecast period, owing to the increasing consumption from the organic chemicals, inorganic chemicals, and pulp and paper segments.
Key Market Trends
Organic Chemicals Segment to Dominate the Market
- The organic chemicals segment represents the largest application segment of caustic soda in Europe. This application is also the third-fastest growing segment of the market studied in the region.
- Caustic soda mainly acts as a reagent or basic solution to manufacture organic chemicals. Organic chemicals use caustic soda for manufacturing different major organic chemicals, such as methanol, sulfites, phosphites, hydroxyl ethyl cellulose, carboxymethyl hydroxyethylcellulose, cellulose ether, methylcellulose, propylene oxide, polycarbonate, ethylene amines, epoxy resins, acetic acid, and epichlorohydrin. Moreover, it is used for neutralization and gas scrubbing by many organic chemical manufacturers.
- Epoxypropane (propylene oxide), another important organic chemical, also uses caustic soda for manufacturing polyurethanes.
- 3A Composites launched its new brands for the polycarbonate and polyester range by Polycasa. The extruded polycarbonate POLYCASA PC is called IMPEX and the extruded multiwall polycarbonate sheet POLYCASA SPC is called IMPEX MULTIWALL.
- Covestro started expanding its production lines in Germany for high-quality polycarbonate films, which are likely to be online by the end of 2020. The company equipped these production lines with the latest technology, and they are designed specially to produce multi-layer flat films.
- Germany, Belgium, and Spain are the major countries producing organic chemicals, with the increasing demand for caustic soda in the production of polycarbonate, methanol, polyurethane, epoxy resin, acetic acid, etc. The demand for caustic soda in manufacturing organic chemicals is expected to be moderate during the forecast period.
- Owing to the above-mentioned factors, the demand for caustic soda from the organic chemical segment is expected to rapidly increase over the forcast period.
Germany to Dominate the Market
- Germany is forecast to account for the largest share of the European caustic soda market, over the forecast period.
- In terms of the total installed production capacity for the manufacturing of caustic soda, Germany ranked first in Europe, with the total estimated production capacity of approximately 5,752-kilo metric ton and a share of about 38.75%. Some of the largest players in Germany are Dow, BASF SE, Covestro, INOVYN, and Vinnolit. Apart from domestic production, the country primarily imports its caustic soda from Belgium, the Netherlands, France, and Poland.
- The German chemical industry represents the chemical manufacturing industry across Europe, generating an estimated contribution of about 28% of the total revenue of the chemical industry in Europe. The German chemical industry invested a total of about USD 4.6 billion on R&D, making it the fourth-largest R&D spending nation across the world, after China, the United States, and Japan.
- The German chemical industry, which took a major upturn in 2017, continued to show positive growth till Q4 2018. The downward trend in the German chemical industry began in Q4 2018 and continued till the first two quarters of 2019. With BASF SE announcing its decision to transform the organization, Covestro experiencing decline in sales, and Bayer AG struggling with the Monsanto acquisition, the German chemical sector has been witnessing a huge downfall.
- In H1 2019, the production of the German chemical industry witnessed a slump of 6.5%, while the pharmaceutical production declined by 2.5%. As a result, the total revenue generated declined by 4% Y-o-Y over H1 2018 and reached a total of EUR 95.9 billion (USD 105.7 billion).
- In H1 2019, the production of fine and specialty chemicals witnessed a decline of 4%, the production of cosmetics and soaps witnessed a decline of 4.5%, and the production of polymers and detergents and personal care products also witnessed a huge decline. The outlook for the rest of 2019 was also weak, with an expected decrease in production. This trend has hugely affected the demand for caustic soda.
- Hence, owing to the above-mentioned factors, the demand for caustic soda in Germany is expected to further grow over the forecast period.
The European caustic soda market is partially consolidated. The major players of the market studied include Dow, INOVYN, KEM ONE, Nouryon, and BorsodChem.
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