A study conducted by Consulting Resources Corporation on the outlook for three key chlor-alkali chemicals indicates a relatively stable market ahead for chlorine, caustic soda, and soda ash. U.S. production of chlorine, caustic soda and soda ash will grow by about one percent per year, on average, in the coming decade.

The global chlor-alkali industry has generally been facing maturing demand, a problem made even more challenging by any weakness in the economy. What makes the chlor-alkalis more complex than many other parts of the chemical industry is the unique co-product relationship between chlorine and caustic soda (also known as sodium hydroxide). Chlorine demand is generally more sensitive to fluctuations in the economy than is co-product caustic soda. For this reason there is a perpetual imbalance between supply and demand for these two important chemicals.

Some of the most significant end products for chlorine, such as polyvinyl chloride (PVC) and ethylene dichloride (EDC), tend to see weak demand whenever there is economic weakness. As a result, chlorine prices come under additional pressure from falling PVC and EDC prices, impacting the margins of chlor-alkali producers.

Longer-term, the outlook for the chlor-alkali industry is somewhat predictable. As in the past, the industry will follow the lead of the economy as a whole. As the economy strengthens, chlor-alkali demand and pricing will also change favorably.

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