EU chloralkali output slows as markets weaken

EU Cl2 Jul12.pngChloralkali production is an excellent indicator of market direction in the short-term. Unlike petrochemicals, cellrooms can quickly reduce or increase operating rates. This is essential for efficient operation, as the price for electricity can change every 30 minutes.

Thus as the above chart of European chlorine production shows (based on Eurochlor data), demand seems to have fallen sharply in June (red line):

• It fell to 760KT, equal to June 2009
• H1 output was thus down 3% versus 2011 levels

Operating rates also fell sharply to 73.5%, compared to 77.5% in May.

Producers are clearly anxious to avoid the experience of H1 2009, when caustic soda stocks jumped 44% between January – April, as end-user demand tumbled during the financial crisis.

Their quick response suggests EU demand is weakening quite fast, as the Eurozone crisis continues. Equally, it confirms the slowing export trend, as China’s downturn continues.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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