US chlor-alkali prices to stay strong - OxyChem

29 February 2008 00:27  [Source: ICIS news]

GALVESTON, Texas (ICIS news)--US chlor-alkali prices are set to remain strong for the foreseeable future on limited capacity additions, strong exports of derivatives and high domestic transport costs, an Occidental Chemical (OxyChem) executive said on Thursday.

“2008 should be a fairly snug year for chlorine with US operating rates in the low 90% range versus 91.6% in 2007,” said Harry Thomas, business director, chlorine and derivatives at OxyChem at the ISM Chemical Group Mid-Winter Conference in Galveston, Texas.

January US caustic soda prices were assessed at $470-520/DST (dry short ton) FOB (free on board), unchanged from the month prior, according to global chemical market intelligence service ICIS pricing.

US chlorine contract prices for Q4 2007 were assessed at $315-335/ST (short ton), according to ICIS pricing. However, chlorine spot prices have been falling, according to market sources.

Despite $2.5bn (€1.7bn) in new investments in chlor-alkali capacity in the US through 2011, including Shintech’s $1bn facility scheduled to start up in the second quarter of 2008 with 330,000 short tons/year of chlorine capacity, negligible net new capacity will come on line, he said.

OxyChem is shutting down its Muscle Shoals, Alabama facility, in the second quarter, taking 154,000 short tons of chlorine off the market, while Dow Chemical plans to reduce chlorine capacity by 450,000 tons by 2011, even as it invests $1bn to upgrade its plants to membrane cell technology.

“Even with Olin, Canexus, and ERCO raising capacity, there will be no new net capacity increase,” said Thomas. “I don’t see prices going down in the long run.”

Current US capacity for chlorine is 13.8m short tons, but only 30% is merchant capacity, with 70% being captive, he said.

In addition, railroads are reluctant to ship chlorine and are charging high rates, adding to the upward pricing pressure. “Railroads don’t want to ship chlorine and will make it difficult to do so,” said Thomas.

On the caustic soda front, the market is also expected to remain tight, he added. US capacity from 2006 to 2009 will be largely unchanged at 16.68m short tons and exports are on the rise, having increased by 19% in 2007.

“Because of the weak US dollar, higher exports are offsetting domestic weakness in the housing market,” said Thomas.

The ISM Chemical Group Mid-Winter Conference began on Thursday and ends on Friday.

($1 = €0.66)

For more on chlor-alkali products visit ICIS chemical intelligence

 

 


By: Joseph Chang
+1 713 525 2653



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