Olin sees tight caustic soda market through 2012

02 December 2008 21:51  [Source: ICIS news]

HOUSTON (ICIS news)--US chlor-alkali producer Olin said on Tuesday it would continue to experience high profit margins in its chlor-alkali sector due to a net reduction of North American production capacity over the next three years.

In a presentation to the Citi Chemicals Conference, Olin said North American chlor-alkali production capacity would be reduced by 5.6m tonnes/year from 2010 through 2012 but expanded by only 4.5m tonnes/year.

That net capacity reduction of 1.1m tonnes/year will keep caustic soda supply conditions tight, particularly since caustic soda demand in North America is growing at a rate of about 100,000 tonnes/year, Olin said.

“We expect the tight caustic market to continue, which should provide a positive pricing environment into first half of 2009,” the company said in a written version of its presentation.

Olin said its profit margins would also increase as a result of the conversion of its 205,000 tonne/year mercury-cell St Gabriel caustic soda plant in Louisiana into a membrane-cell plant with greater production capacity and efficiency.

That project will reduce the company’s annual brine and energy costs by a combined $30m (€23.7m), Olin said.

US caustic soda producers include Dow Chemical, Occidental Chemical, Olin, PPG Industries, Formosa Plastics, Georgia Gulf, Bayer, Shintech and Westlake .

($1 = €0.79)

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By: Greg Holt
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