26 January 2010 17:21 [Source: ICIS news]
HOUSTON (ICIS news)--The US chlor-alkali industry may shut down plants to match supply with demand, an executive with Olin said on Tuesday.During the last downturn, 12% of US capacity was shut down, said John McIntosh, president of Olin's chlor-alkali division. He was speaking during an earnings conference call.
"We still think there is that opportunity for capacity to be shut down from an industry perspective," McIntosh said.
The forecast comes as chlorine prices remain under pressure, a trend that should persist into the first quarter, McIntosh said.
"We just don't see any significant change in the status quo - at least for the first quarter - that tells us we should expect a significant change in chlorine pricing," he said. "There's going to continue to be pressure on chlorine pricing, and we may see some slight erosion."
Olin sells most of its chlorine in the merchant market, the company said in its annual report. Of that amount, Olin estimates that 16% of its chlorine is used to make ethylene dichloride (EDC), a feedstock of polyvinyl chloride (PVC).
PVC, in turn, has struggled with weak demand as a result of the downturn in construction.
Chlorine is also used to make bleach. Bleach sales have actually increased due to demand from the water-treatment and disinfectant end markets, McIntosh said. In addition, Olin has started distributing bleach by rail instead of truck, which also boosted sales.
Chlorine is produced along with caustic soda in a ratio of 1 unit chlorine/1.1 unit caustic soda.
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