Key Driving Factors Of The Chlor-Alkali Market

Increasing demand of chlor-alkali products in the emerging markets, high demand from end-use industries, and high existing production capacities of chlor-alkali products is driving the chlor-alkali market. Growth in the demand of EDC/PVC is driven by the growing construction, automotive, and personal care industries, globally. Growth of the chlor-alkali market is backed by growth in its niche applications, which include textile, water treatment, and various others. The market for chlor-alkali will continue to be governed by such factors in the future.

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Three main products, namely, chlorine, caustic soda, and soda ash mainly characterize the chlor-alkali industry. These chlor-alkali products are further used in various applications, which include EDC/PVC, organic and inorganic chemicals, paper & pulp, water treatment, glass, metallurgy and other applications. In 2015, EDC/PVC application of chlorine had the largest market share among all the applications of chlorine.

The shutting down of all mercury cell-based plants is set to have an effect on the European market. Not all plants are planned to be modified into membrane or diaphragm technology. This is expected to increase the imports in the European region, which is still reeling from the Eurozone crisis.

Asia-Pacific and the Middle East & Africa are the fastest-growing chlor-alkali markets. The rising per capita consumption of chlorine, caustic soda, and soda ash has made these regions as hotspot for the chlor-alkali market. Increasing industrialization in India, Southeast Asia, and China has made Asia-Pacific the market leader, in terms of demand as well as growth. The Middle East has always enjoyed cheaper electricity tariffs and is strategically located to cater to the needs for export markets in Asia-Pacific, North America, and Europe.

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Food and pulp & paper accounted for the largest share of caustic soda in 2015. It is further projected to follow the same trend and remain the largest application until the forecast period. In addition, the fastest-growing application for caustic soda is projected to be textile. For soda ash, glass accounted for the largest share, its demand in 2015 was over 50% of the total soda ash market. Increased demand from the packaging & container industry has spurred the demand for glass, globally. With the increase in demand from construction, automotive, and other industries, the demand for EDC/PVC is set to increase at a significant rate. EDC/PVC was also the largest application segment for chlorine. The Middle East & Africa and Asia-Pacific regions offer high growth opportunities in the chlor-alkali market.

Many companies in this industry have expanded their production capacities and also involved in other market penetration activities. Olin Corporation (U.S.), Solvay (Belgium), Tata Chemicals Limited (India), Occidental Petroleum Corporation (U.S.), Axiall Corporation (U.S.), AkzoNobel N.V. (Netherlands), Formosa Plastic Corporation (Taiwan), Hanwha Chemical Corporation (Korea), Tosoh Corporation (Japan), Nirma Limited (India), and Tronox (U.S.) were the most active companies.

Caustic Soda had the largest demand among other chlor-alkali products

Globally, the chlor-alkali market is one of the largest chemical industries, in terms of both value and volume. The major chlor-alkali products are chlorine, caustic soda, and soda ash.

Caustic soda has a wide range of applications in different end-use industries such as alumina refining, organic & inorganic chemicals, soaps & detergents, water treatment, and food and pulp & paper. Major challenges for the global caustic soda manufacturers include the high-energy costs and stringent environmental regulations. In India, there are high input costs, which make the local industry less competitive. However, there have been changes in the policies and it is expected that there will be a positive outcome for the local caustic soda industry of India. The improving manufacturing industry globally will help increase the caustic soda demand in chemical and alumina applications. Soaps and detergents application, especially in India will drive the caustic soda market in the region.

The global market size of chlor-alkali is estimated to reach USD 102.60 Billion by 2021 and is projected to register a CAGR of 5.4%. The applications for caustic soda are alumina, inorganic chemicals, organic chemicals, food and pulp & paper, soaps & detergents, textiles, water treatment, and steel/metallurgy-sintering. 

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Asia-Pacific is the largest chlor-alkali market, globally. The region accounts for a major share of the chlor-alkali market and is the largest producer of chlor-alkali, globally. China is the largest and fastest-growing chlor-alkali market in the region. With the continuous increase in capacity of chlor-alkali, the country has an upper hand, as the manufacturing costs in the country for chlor-alkali are low. India is another high growth market for chlor-alkali in the region; the country is expected to be a driving factor for the industry in the region.

Stringent environmental regulations for mercury emissions have forced the producers to shift to diaphragm and membrane cell technologies. There is an oversupply of caustic soda in the market due to the electrochemical unit ratio.

Solvay S.A. has a global footprint with a wide product portfolio and diverse revenue stream. The demand from the Asia-Pacific market has provided an opportunity for the company to cater to the needs of the region. The volatile exchange rates are affecting the financial situation of the organization. The company’s strong R&D laboratories help it to stay a step ahead of its competitors. It is focused on sustainable development, innovation, and operating excellence.

Expansions and mergers & acquisitions were the key strategies adopted by industry players to achieve growth in the global chlor-alkali market

Expansions and mergers & acquisitions were the key strategies adopted by industry players to achieve growth in the global chlor-alkali market between 2013 and 2015. These two strategies together accounted for the largest share of all the strategies adopted by market players.

Some of the leading chlor-alkali manufacturers are Olin Corporation (U.S.), Occidental Petroleum Corporation (U.S.), Axiall Corporation (U.S.), AkzoNobel N.V. (Netherlands), Formosa Plastic Corporation (Taiwan), Hanwha Chemical Corporation (Korea), Tosoh Corporation (Japan), Nirma Limited (India), and Tronox (U.S.).

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Besides expansions and merger & acquisitions, companies adopted joint ventures and agreements to expand their market share and distribution network. These strategies accounted for a small share of the total number of growth strategies adopted by the market players in the chlor-alkali market between 2013 and 2015.

Solvay, Olin, Tata Chemicals, and AkzoNobel are some of the global market players who expanded their production facilities and entered into various agreements between 2012 and 2015 for expanding their market reach. During the same time period, Tosoh, Tronox, and Olin entered into various mergers & acquisitions. Tronox is also the largest natural soda ash producer globally and with the acquisition of FMC Corporation it is one of the market leaders.

Tosoh entered into one merger and one acquisition in 2014 and 2015, respectively. In 2015 it acquired shares of Mabuhay Vinyl Corporation (Philippines) to increase its integrated supply of vinyl isocyanate and also penetrate into the growing Philippines market. The company also engaged with Nippon Polyurethane Co. Ltd. (Japan) to cope up with the domestic challenge. These moves will help the company to mark a greater presence in the Asia-Pacific region.

Solavy was very active in expanding its global footprint by expanding its facilities in the U.S. and Thailand. In Thailand, the company has Asia’s largest sodium bicarbonate plant. Solvay also expanded its Wyoming facility in the U.S. for soda ash. The expansion is expected to increase the manufacturing capacity of the plant by 150 kilotons to meet the growing demand from its U.S. export markets.

Other developments between 2013 and 2015 include development of new and enhanced membrane plants and expansions by OxyChem, Hanwha Chemical Corporation, and Xinjiang Zhongtai.

Related Reports:

Chlor-Alkali Market by Products (Caustic Soda, Chlorine, and Soda Ash), Applications (Alumina, EDC/PVC, Glass, Organic Chemicals, Inorganic Chemicals, Food, Pulp & Paper, Water Treatment and Others) & Region – Global Forecast to 2021