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Chlorine and sodium hydroxide are usually coproduced and are two of the most important inorganic chemical commodities. Sodium hydroxide is often referred to as caustic soda or just caustic. Another important alkali is sodium carbonate, commonly referred to as soda ash. The chlor-alkali industry is energy intensive, with electricity and other utilities typically accounting for 40–50% of production costs.
As of July 2005, more than 500 companies produced chlor-alkali at over 650 sites worldwide, with a total annual capacity of about 55.6 million metric tons of chlorine. About half of all plants are located in Asia, but many of these are relatively small. Global consumption of chlorine in 2004 was nearly 50 million metric tons. The following pie chart shows consumption in selected countries/regions:
The major use of chlorine is in the manufacture of ethylene dichloride (EDC), which in turn is used to make vinyl chloride (VCM) and subsequently polyvinyl chloride (PVC). PVC had been growing at a fast rate in the late 1990s and into 2000, but slowed in 2001 because of slowdowns in the U.S. and Asian economies. The PVC industry experienced a strong 2004 as a result of continuing improvement in the construction market and inventory stocking. Future global growth is expected to be around 3% per year.
The following graph provides a breakdown of chlorine consumption by country/region:
The chlorine industry has been under considerable environmental pressure in the last 25–30 years, but most of the negative effects on the chlorine market have already been felt. Use of chlorine to bleach pulp and paper used to account for about 15% of U.S. consumption in the mid-1980s, but this use has largely disappeared in North America and Western Europe because of environmental concerns. The phaseout of halogenated ozone-depleting materials (e.g., chlorofluorocarbons [CFCs] and methyl chloroform) is largely complete.
Generally, most producers operate their plants to make chlorine since it is hard to store and is used for derivatives like EDC, phosgene and epichlorohydrin. Caustic soda is generally sold on the merchant market and consumed in a myriad of uses. Little chlorine is traded among countries, except between the United States and Canada, but a considerable amount of chlorinated derivatives is traded. The United States and Japan each export about 20% of consumption of chlorine in the form of chlorinated derivatives.
Caustic soda is also heavily traded, especially in aqueous form. The United States routinely exports about 10–15% of its production. The Middle East exports about 50% of its caustic. Some of the bigger importing countries are Australia, Jamaica and Surinam, which are among the leading producers of aluminum (a leading use for caustic soda).
The following pie chart shows consumption of sodium hydroxide by country/region:
Chlor-alkali producers tend to be regional. Only Dow Chemical can be considered a major multinational producer with a strong presence in North America and Europe, and with more than 10% of total global capacity. Many relatively small plants are still operating in Western Europe and Japan; however, there have been shutdowns in the last few years because of stagnating markets and concern over the impending phaseout of mercury cell production, which still accounts for about 50% of Western European capacity.
The chlor-alkali industry is in the profitable phase of the commodity cycle, with demand rising in 2004, and prices rising considerably in 2004–2005. The competitive advantages of the United States in chlor-alkali production have largely vanished with the steep increase in energy prices, and so it is expected that little new capacity will be built to support export-oriented facilities. Globally, there is relatively little new capacity coming on stream in the next few years, except in China, which should lead to attractive industry profitability at least through 2006, and may prompt producers in all regions to reinvest again in the business.
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