CEH Report

Table of Contents

Abstract

Chlorine and caustic soda (sodium hydroxide or chlor-alkali) are produced as coproducts, usually in electrolytic cells. About 1.1 units of caustic soda are produced per unit of chlorine. Chlor-alkali production is energy intensive, with electricity typically accounting for 40–50% of variable production costs. Most chlor-alkali is produced by electrolyzing a solution of brine using either membrane, diaphragm or mercury cell technologies. Membrane technology is now dominant in the industry because it is more energy efficient and does not present environmental concerns like the mercury process.

The following pie charts show world consumption of chlorine and sodium hydroxide (EU 27+ includes the EU 27 plus Norway, Switzerland and the former Yugoslavia):

The largest end use for chlorine is in the manufacture of ethylene dichloride (EDC), which in turn is used to make vinyl chloride (VCM) and subsequently polyvinyl chloride (PVC). Global growth for PVC is expected to be in the range of 4–5% per year.

The vinyl chain accounts for almost 35% of chlorine consumption, and isocyanate and propylene oxide manufacture accounts for another 15%. Other organic derivatives account for 20%, inorganic chemical production accounts for 20%, and the remaining 10% consists of miscellaneous end uses including water treatment. The pattern is not expected to change markedly over the next few years, although specific applications may undergo some change.

Large volumes of caustic soda are used in many diverse end uses, particularly within the chemical industry, which accounts for about 40% of global demand. However, there are two specific end uses for caustic soda where more accurate estimations of demand can be made—alumina production and the pulp and paper industry. These two uses for caustic soda account for almost 30% of global demand. As with chlorine, most uses for caustic soda are well established and significant changes in the distribution of market demand are not expected.

The chlor-alkali industry tends to be very cyclical, with years of low profitability followed by periods when margins are high enough to justify reinvestment. Most new larger chlorine plants are now built to supply feedstock to EDC facilities, except in China where some plants are constructed to supply feedstock to a variety of chlorinated derivatives (mainly phosgene for isocyanates and polycarbonates). The Middle East is attractive for chlor-alkali investment because of its low energy costs, and Asia is attractive because of its growing markets. However, the need for the Middle East to export much of its 50% caustic soda solutions over long distances tends to limit its attractiveness for large-scale investment.

Caustic soda production and demand will recover slowly in Europe but there will be some growth in Eastern Europe. Demand in Central and South America will grow but capacity growth will be limited, so that this region will become more dependent on imports of caustic soda and chlorinated derivatives. Demand in the Middle East will grow but production is forecast to grow more rapidly as a result of several world-scale export-oriented projects coming onstream.