the global chlor-alkali industry saw improvements in pricing and production during the first half of 2010, as operating rates worldwide came out of their lowest levels in a decade after the crash of late 2008.
china, the emerging powerhouse of global chlor-alkali production and growth, saw operating rates fall by 50-60% during the recession of 2009. the u.s operating rates ranged between 70 and 80% last year after plummeting to 50% in late 2008. operating rates in western europe also ran between 65% and 75% last year.
according to uk-based consulting firm tecnon orbichem, about 38% of the chlorine consumed in 2009 went into vinyl production, the biggest consumer of chlorine. statistics showed current global chlorine capacity at 76.7 million tons/year.
operation rates in the chlor-alkali industry have been generally lower due to the weaker chlorine and vinyl markets last year, and things have only marginally improved so far this year.
there has been an improvement in caustic soda demand this year, and two of the larger consuming industries—alumina and pulp and paper—have improved since 2009, and since caustic soda is currently tight, prices are being supported.
chlorine demand, on the other hand, still remains weak, as the us housing and automobile markets are still quite enfeebled. vinyl demand in the european industry has seen a slight improvement this year, but progress is slow.
q2 earning announcements from several us chlor-alkali players revealed improved demand this year since 2009.
olin, the missouri, usa-based company, reported higher q2 2010 operating rates for its chlor-alkali operations at 83%, compared with 75% in q1 and 70% in the same period a year ago.
olin is the third-largest chlor-alkali producer in north america, with a total chlor-alkali capacity of 1.78 million tons/year, following dow chemicals, with 3.54 million tons/year and occidental chemicals (oxychem), with 3.09 million tons/year. ppg industries follows olin, with a total capacity of 1.68 million tons/year.
olin reported its q2 2010 ecu (electrochemical unit) ex-factory price at $470/ton, 7% higher than its q1 value.
dow notes that if the economic recovery returns conditions to normal for the housing and automotive markets, the outlook for chlor-alkali in the next 12 months will stay on its consistently more positive trend.
in july, dow announced plans to build a new 800,000 tons/year chlor-alkali facility in freeport, texas, usa, in a 50-50 joint venture (jv) with japanese chemical firm mitsui & co.
olin pointed out that chlorine capacities in north america decreased by 2 million tons last year to 13.6 million tons.
china, however, continues its capacity build-up even in the midst of the recession. industry sources project that planned caustic soda expansions in china will produce around 3.16 million tons/year by 2011, and china’s pvc capacity will surpass 25 million tons/year by 2012.
in august, two chinese companies announced plans to build caustic soda and pvc facilities. alaer qingsong chemicals said it expected to build a new 100,000 tons/year caustic soda plant expandable to 300,000 tons/year in northwestern xinjiang province. the facility is expected to start by the end of 2011.
inner mongolia zhonggu mining expects to build a 600,000 tons/year carbide-based pvc plant and a 600,000 tons/year caustic soda unit in northern inner mongolia. the two plants are scheduled to be in operation by 2012.
amid the improving global chlor-alkali demand, many industry players expect worldwide capacity to remain oversupplied, especially with the 300-plus projects still under way in china. potential growth for chlor-alkali is likely to come from rapidly growing countries such as china, india, brazil and other emerging regions.
however, many chinese small chlor-alkali and vinyl resin producers are bound to face restructuring and elimination.
