Chlor-Alkali '05: Payback time arrives for US producers

03 November 2005 18:29  [Source: ICIS news]

HOUSTON (ICIS news)--The US chlor-alkali industry is reaping the rewards of plant closures and market discipline that have turned around profitability, said Charles Fryer, managing director of Tecnon OrbiChem on Thursday.

 

“In 2002 there was negative cash flow, which led to substantial plant closures. Now it is payback time,” said Fryer, who spoke at the 2005 USA Chlor-Alkali Conference in Houston.

 

He said that cash flow was now positive and return on investment was 10%. That meant if a new US plant had been brought on stream last year, its construction costs would have been covered in 2 years.

 

However, Fryer added that there was no rush to new investment because “the market share mentality has disappeared. There is a cautious and prudent approach.”

 

He said that this approach had led to the virtual complete withdrawal of US producers from the ethylene dichloride export market because of poor returns.

 

Globally, Fryer predicted that chlor-alkali operating rates would climb to 87.5% in 2010 from 86% last year because of insufficient new capacity.

 

The conference sponsors are Chemical Market Reporter, Tecnon OrbiChem and Anorganica. It continues through Friday.

By: John Richardson
+65 6780 4359

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