Dow declares caustic soda FM at 2 Germany sites

19 December 2008 15:29  [Source: ICIS news]

LONDON (ICIS news)--Key northwest European caustic soda manufacturer Dow Chemical has declared forces majeures on supply from its two German sites as a result of drastic cuts to chlorine and polyvinyl chloride (PVC) operating rates, a company source said on Friday.

The source said that the forces majeures were in effect on supplies from Schkopau,  producing 240,000 tonnes/year, and Stade, producing 1,584,000 tonnes/year, the largest caustic soda facility in Europe.

“We tried all options before declaring force majeure,” said the source, “We offered fewer volumes to our customers, tried to postpone demand, but it was not possible… We cannot run at normal rates as chlorine demand is so poor, so we cannot produce caustic soda as a result.”

“We hope that the situation will be resolved by the first-quarter 2009 when demand for PVC and chlorine derivatives returns but we are not making any commitments.”

The announcement followed Vinnolit’s and Akzo Nobel’s earlier declarations of force majeure on 26 November, which were still ongoing according to company sources on Friday.

Caustic soda, with its co-product chlorine, the majority of which goes into PVC production, is produced via electrolysis of brine, in the ratio of one part chlorine to 1.1 parts caustic soda.

The two markets have been characterised by counter-cyclicality recently, with caustic soda tightening as chlorine and PVC demand dwindles.  

Dow’s move, combined with two other confirmed forces majeures in Europe and drastic cuts in upstream chlorine production, was seen by industry players as likely to significantly tighten the market, which had returned to a more balanced position as the global financial crisis had led to a downturn in demand.

For more on Vinnolit, Akzo Nobel and Dow Chemicals visit ICIS plants and projects
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By: Stephanie Wilson
+44 20 8652 3214

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