Keeping track of the chlor-alkali cycle

01 July 1997 00:00  [Source: APC]

Like the rest of the chemical industry, chlor-alkali has its ups and downs. Naresh Gupta explains.

The chlor-alkali industry, just like any other capital intensive sector, experiences cycles in demand, according to Charles Fryer, managing director, of industry consultancy Tecnon UK.

Speaking at the Chlor-alkali conference in London last month, he suggested that the boom-bust-boom cycle occurs over a span of seven to eight years.

According to Fryer this 'results from the four to five years it takes from the peak of the cycle - at which point too many companies decide to invest in new plants - through financing, design, engineering and construction, to final startup of those new plants. It then takes four to five years for demand to catch up with investment, or before tough decisions are taken on shutdowns,' Fryer explains.

Fryer cited the cycle in ethylene which occured between 1994-97 as an example of cyclical demand. The product surprised everyone in the industry by the abruptness of its upturn and the brevity of its duration.

But Fryer says 'shortage of capacity played only a small role in the upturn, and overbuilding was not the cause of the downturn. Instead it was the expectation of shortages that induced a build-up of inventories in 1994, so when consumers became comfortable with their stock levels and reduced purchases, the bubble burst.'

One of the leading players in the chlor-alkali market is Dow Chemical with six global manufacturing sites; three in North America, one in Brazil and two in Germany. The firm also has 34 caustic soda terminals worldwide.

The firm has more than 100 years of experience in the sector and claims to be the world's largest producer of chlorine and caustic soda, accounting for 28% of US and 13% global capacity in 1997.

And according to Vince Smith, Dow's global business director of chlor-alkali, the firm is to underscore its commitment by increasing global capacity by an additional 420 000 tonne/year at its production sites in North America and Europe over the next two years.

Although it boasts being the largest producer of chlorine, it is not the largest merchant. More than 90% of Dow's chlorine is used internally to make other products, but the importance of chlor-alkali products goes far beyond Dow.

The chlorine molecule is reported to be involved in 40-60% of commercial chemistry and has been described as the single material on which the production of other chemicals most depends.

Applications range from the production of plastics to water purification chemicals.

Worldwide, there are more than 500 chlor-alkali producers with a total nameplate capacity of more than 45m tonne/year of chlorine and 50m tonne/year (on a dry basis) of caustic soda.

Caustic soda and chlorine are mature products. As no new major end-use applications are anticipated, growth rates are near gross domestic levels. With the global chlorine market projected to grow 1.5-2.5%/year and caustic soda by 2-2.5%/year over the next decade, imbalances are likely to occur.

In the US, demand for chlor-alkali will grow 1.5%/year to 36m tonne in the year 2000, worth US$6.7bn, according to a latest study by the industry consultancy, the Freedonia Group.

Demand for the three large volume products (chlorine, caustic soda and soda ash) will increase sluggishly, due to the reliance on mature, slow growing, end-use markets and the impact of environmental restrictions. Demand for the two smaller volume products, sodium bicarbonate and caustic soda, will advance at above average rates of 3.6%/year and 3.2%/year respectively.

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The report also predicts strong advances in PVC intermediates, ethylene dichloride (EDC) and vinyl chloride monomer (VCM) coupled with slower but positive advances in several smaller markets resulting in chlorine growth. This is set to occur despite the decline in demand for chlorine in pulp bleaching, chlorofluorocarbons, and chlorinated solvents.

However, the declining market for chlorine in pulp bleaching will have a positive influence on caustic soda.

Caustic soda is used on the delignification stage of the pulp bleaching process and, as chlorine is replaced with sodium chlorate, hydrogen peroxide, ozone and other bleaching technologies, delignification stages are being extended to improve paper brightness. This will boost demand for caustic soda, as well as increasing the production of propylene oxide and polycarbonate plastics.

Demand for soda ash will benefit, says the report, from increasing automotive production and improved levels of construction activity, both of which consume large amounts of flat glass. However, soda ash demand in container glass (glass bottles and jars) will increase at a much slower rate, the result of consolidation in the glass container industry, replacement of glass bottles with plastics in the soft drink segment of the market, and the use of recycled glass, which obviates the need for soda ash.

More than 95% of all chlor-alkali production is based on the electrolysis of salt brine. Three electrolytic processes diaphragm cell, mercury cell and membrane cell technologies) are currently used to produce caustic soda and chlorine (see diagram on page 39).

Diaphragm cell technology

Diaphragm cell technology produces chlorine, caustic soda and hydrogen simultaneously. Saturated brine enters the anode compartment of the cell, where chlorine gas is liberated. The function of the diaphragm is to separate the brine from the caustic solution (called the cell effluent) at the cathode side which is also where hydrogen gas is released.

Membrane cell technology

Membrane cell technology is a relatively recent development. It differs from the diaphragm cell method in so much that the solutions surrounding each electrode are separated by a membrane rather than a diaphragm. The membrane is said to be very selective and only allows the migration of sodium ions from the anode chamber to the cathode chamber. Chlorine is evolved at the anode. Since brine cannot pass through the membrane to the cathode, the cell effluent contains substantially less sodium chloride. No salt removal capabilities are required as in the diaphragm cell process.

Mercury cell technology

Mercury-cell technology is substantially different from diaphragm or membrane cell. Rather than chlorine and caustic soda (and hydrogen) being formed simultaneously in one cell, two distinct operations - the electrolyser and decomposer - are required to form products. Chlorine is evolved at the anode and sodium is deposited at the surface of the mercury cathode where it dissolves to form a liquid amalgam.

The amalgam flows to the decomposer where it is reacted to form a caustic solution. Mercury waste is still produced in the process. Due to the environmental concerns associated with mercury, the disposal of the waste is being banned in many areas. This has prompted research by the mercury cell producers to develop technology which would allow more of the mercury to be recycled back into the process.

The chlorine deficit in Asia is being met by supplies from the US and western Europe. It is estimated that such trade covers 80%-plus of the total inter-regional chlorine derivatives trade, according to Tecnon.

At 4.2m tonne in 1994, intercontinental trade represents 11% of chlorine consumption. Up to 16% of chlorine produced in North America is exported in the form of EDC, VCM or PVC.

Tecnon says the chlorine deficit in Asia is made up of imports of EDC, VCM and PVC from the US, western Europe and the Middle East. Almost half of the chlorine flow takes place in the form of EDC.

Asian chemical companies will be looking to replace these imports with local production, provided the pricing is competitive. The main obstacle is that when chlorine is produced, so too is caustic soda, and this too will have to be placed. Most Asian countries are already self-sufficient in caustic soda, so any additional production will have to be exported.

The viability of new chlor-alkali products in Asia thus often depends on the export price that can be garnered for caustic soda.

If such projects are installed in Asia in the future, it will signify a fall off in exports of EDC and derivatives from the US, Europe and the Middle East.

The alternative to installing a chlor-alkali plant producing EDC, VCM and PVC is to import EDC and confine the local investment to building a VCM and PVC plant.





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