Industry / Business
Chlorine shortage shows signs of easing Monsanto, points out reasons for prices upward to $120 a ton or even doubt. Speaking at the Manufacturing higher." Chemists Association's semiannual The increase in chlorine capacity meeting in New York City last month, from the fairly stable level of the early Ernest S. Robson Jr., vice president of 1970's already has been marked. By energy and materials management at Chlorine Institute estimates, updated Monsanto, noted a possible shift in with producers' comments on delayed chlorine's capacity-demand balance. on-stream dates, U.S. chlorine capacity "New chlorine-caustic plants based on will have risen about 16% by late winthe diaphragm process have been an- ter to 12.8 million tons per year from nounced for 1975 and 1976," he says. 11.1 million tons in January 1974. This "However, this 10% increase in capaci- addition, largely in new plants being Chlorine is one of the first major chem- ty could be serving a mixed demand. built by Diamond Shamrock at Battleicals to get large new capacity in the Well over half of the chlorine is used in ground, Tex., and by Hooker at Taft, current plant boom. But the yellow- organic chemicals, which are under in- La., gives chlorine twice the capacity green gas also has such widespread use creasing environmental attack. First, it gain in one year as in the previous four that it is vulnerable to a general eco- was DDT, 2,4-D, and 2,4,5-T. Now, we years combined. Dow sales manager Pirkle thinks the nomic slowdown. Thus, some large have questions about vinyl chloride producers are beginning to wonder and other chlorinated hydrocarbons. In chlorine industry can absorb this new whether these two factors could reverse addition, the stable chlorine outlet for capacity handily. "The two major new in 1975 the severe shortage that has al- municipal water treatment is being plants coming on stream will provide lowed chlorine's sharp upswing in prices questioned. On the other hand, caustic just enough assistance to go along with soda demand for chemical processing growth in the year. We have needed and profitability in 1974. "I don't think chlorine is as tight as and the paper industry continues new capacity in 1974 to meet demand." Pirkle also points out that it was," says Thurman E. Brown, chief strong. "Although chlorine-caustic prices after these two plants the next major chlorine marketer at PPG Industries, the largest U.S. merchant chlorine may be adequate, these conflicting capacity addition is not due until 1977, supplier. "We are still selling all we pressures could generate a considerable when PPG plans to complete a new can make, and the industry is still sell- price differential. Depending on how plant at Lake Charles, La. ing all it can make. We are concerned producers assign capital and manufacOutput from Diamond Shamrock's over the general economic situation." turing costs, chlorine prices could drift new plant in Texas is already sold out, Brown cites inventory cuts and mixed downward to a range of $105 to $125 a executive vice president W. H. Bricker demand in chlorine's dominant mar- ton. If this occurs, the lower produc- told security analysts in San Francisco ket, chlorinated organics (which ac- tion levels would force caustic soda in September. In fact, the company is count for half or more of chlorine use), as changing signs in the still-strong chlorine market. Chlorine production is pressing capacity From another leading chlorine proMillions off tons ducer, Diamond Shamrock, comes a 20 similar guarded assessment. C. Mark Jones, business manager for chlorine at Diamond Shamrock, remarks: "Market balance is now more possible than six Production months ago. Six months ago, it looked like shortages into 1975." Still, Jones 15 adds, "the market appears to remain strong in 1975." He reasons that slackCapacity" ening demand because of factors such as a reduction of order backlogs in polyvinyl chloride and concern over vinyl chloride safety simply will knock 10 out excess demand and leave the market in balance. The leading chlorine producer, Dow Chemical (with about one third of total industry capacity of 11.5 million tons per year as of October), remains 5 strongly optimistic for next year. Donald S. Pirkle, chlor-alkali group sales manager, says: "Chlorine will continue to have a tight market in 1975. The primary reason is customers' needs we are hearing about for chlorine in 1975. 0 Demand will continue to outstrip sup1964 1966 1968 1970 1972 1974 1976 1978 1980 Ply." a Capacity at end of year. Sources: Department of Commerce, Chlorine Institute, C&EN estimates However, a small chlorine producer,
New plants soon will offer additional capacity, and the gas's widespread use makes it vulnerable to an economic slowdown
Dec. 16, 1974C&EN
9
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considering another new chlorine plant, but no decision has yet been reached. A similar large capacity addition is being mulled by Stauffer Chemical. And Vulcan Materials has just an nounced plans for a 219,000 ton-peryear plant at Geismar, La., due on stream in mid-1977. Although these companies obviously expect to need more capacity, such predictions assume a continued up sweep in demand. Major producers are projecting an average annual demand growth of 5 to 6% for chlorine for the rest of the decade. A pause in this growth caused by a severe recession in 1975 could have se rious repercussions, based on past his tory. In the past decade, chlorine ca pacity use has stayed fairly high among chemical products. The lowest use per centage, 90% or a bit below in 1971, was accompanied by a sharp collapse of prices and profitability for produc ers. In 1974 technical problems such as power failures and long-delayed main tenance have kept plant use at about 94% of nameplate capacity. Even a slight dropoff in demand growth next year could cut capacity use considera bly in view of the new capacity coming on stream this winter. The outlook for chlorine demand next year isn't all that bad. The cur rent pace remains strong, company managers agree. However, some weak nesses are beginning to appear. At PPG, for example, Brown expects PVC demand growth to plateau over the next few years. He says that PVC makers are currently working off in ventory and may continue to do so through the first quarter of 1975. He expects PVC production for 1975 to be about the same as this year. At Dow, Pirkle notes that if the vinyl chloride use is due for a leveling out in 1975, Dow hasn't seen it yet. He adds that even with a break in demand for vinyl chloride, producers would still have a gap with supply.
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In other chlorinated organics, espe cially solvents, Dow and Diamond Shamrock report continued strong de mand. However, Jones at Diamond Shamrock believes that if the automo bile market continues to fall off, de mand for trichloroethylene used in metals degreasing also will fall off. PPG's Brown remarks that demand is already down for perchloroethylene, used largely in dry cleaning. He thinks that trichloroethylene demand won't be high in 1975, but neither will be the capacity to produce it. Methyl chloro form, taking up some of the slack in trichloroethylene demand, will be short again next year, he forecasts. · Chlorine demand in paper remains strong, companies agree. However, Brown anticipates some dropoff in 1975. Demand in water and waste water treatment and inorganic chemi cals is still holding up, with no slack in sight. On balance, producers forecast a lesser rate of price increases for chlo rine in 1975, after an approximate dou bling to the present $120-per-ton price now common on the Gulf Coast. But companies still may try to pass on their increasing costs of energy, the biggest cost item in chlorine produc tion. William F. Fallwell, C&EN New York
Chlorinated organics use half of chlorine production
Polyvinyl chloride sales are now behind production
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Electrolysis of salt produces chlorine atPPGsLake Charles, La., facilities
Sales as % of production
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