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How China's fight against pollution is pressuring disposable diaper makers

Caustic soda prices stay strong as government squeezes production

Chinese authorities have capped output at northern steel mills at 50% of capacity to cut pollution.   © Reuters

TOKYO -- The market for caustic soda, used in a variety of fields from making paper diapers to treating wastewater, finds itself at the mercy of China. Authorities there have been imposing environmental regulations on chemical plants since October, when the twice-a-decade national congress was held.

Prices of Asia-bound exports of the chemical, also known as lye, rose roughly 10% in late November from a month prior. They were nearly double their year-earlier level that same month, and supplies remain tight globally.

Japanese producers in turn have begun raising prices for domestic shipments. In November, Asahi Glass announced a price hike of 18 yen (16 cents) per kilogram. Rivals Shin-Etsu Chemical, Kaneka, Tosoh and Tokuyama followed suit, with all five leading domestic suppliers having raised prices by the middle of this month.

Beijing and other parts of northern China suffer from high levels of the fine particulate matter that coal burning releases into the air. With President Xi Jinping pushing hard for even stronger measures to clean up the environment, Chinese policy is likely to remain a source of commodity volatility.


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