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The global chlor alkali market size was USD 46.26 billion in 2020 and is projected to grow from USD 50.37 billion in 2021 to USD 57.63 billion in 2028 at a CAGR of 1.94% during the 2021-2028 period. The sudden decline in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over. The global impact of COVID-19 has been unprecedented and staggering, with product/service witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 9.0 % in 2020.
Chlor alkali manufacturing plants produce two widely used commodity chemicals such as chlorine and caustic soda (NaOH). The process consumes a significant amount of electricity which accounts for over 40% of total operating costs. Membrane cell technology is prominently used in the production of chlor alkali, and this technology accounts for a fourth-fifth of the total installed production capacity of chlor alkali around the world. Other technologies such as diaphragm and mercury cell account for the rest of the share in production technologies.
COVID-19 Pandemic: Downturn in End-Use Industries to Dampen Market Growth
The outbreak of COVID-19 has impacted most industrial operations across the world. Disruptions in logistics & supplies, labor shortage, absence of end-users, and other restraints are major challenges faced by industries globally. During the initial phase of the outbreak, operation rates had fallen sharply, and some plants had to halt production for a few days. Further, the absence of end-users significantly reduces the demand for these products, particularly chlorine. Consequently, key players in the market have reported a decline in revenues in the global market for the first half of 2020. For instance, Olin Corporation, the world’s largest producer, reported a loss of USD 80 million in Q1 2020 due to dipped sales prices and volume.
However, compliance with the guidelines issued by the World Health Organization (WHO) and government to avoid infection and other remedial measures is expected to revive the construction sector.
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Rising Adoption of Greener Production Technologies by Major Manufacturers to Bolster Market Growth
Chlor alkali production technology is subjugated by using membrane cell technology. However, many production facilities still operate using the mercury cell process. Mercury is a highly toxic element, and environmental concerns have compelled lawmakers to implement stringent environmental regulations on such processes. As a result, manufacturers are converting their mercury cell technologies to greener technologies such as membrane cells. In 2017 and 2018, many plants in Europe converted their technologies, and the same is likely to get reciprocated in different parts of the world in the coming years on the back of rising environmental concerns. Also, in September 2020, Euro Chlor, the European association of chlor alkali manufacturers, launched its strategy for this industry's sustainable future in Europe, highlighting the role of green technology in achieving its goals. The European chlor alkali industry has successfully phased out mercury-cell technology at Europe’s chlorine plants in 2018.
Rising Demand for Vinyl Polymers to Augment Chlor Alkali Market Growth
Chlorine is used in large quantities in vinyl production. Various downstream chemicals are produced using chlorine that is further used to manufacture polyvinyl chloride (PVC). PVC is the world’s third-largest used polymer. It is prominently used in the construction industry to make pipes, window frames, and other products. The thriving construction industry in emerging countries has boosted the demand for chlorine in vinyl production. Moreover, PVC applications in various end-use industries are steadily increasing, which is expected to generate lucrative growth opportunities in the forthcoming years. For example, PVC tapes and cases are healthily used in electrical applications due to their unique properties. The emergence of electric vehicles in the developing world is likely to boost the consumption of PVC and chlorine used in vinyl. Thus, healthy demand from end-use industries is expected to drive the market.
Stringent Environmental Regulations Confines the Market Growth
The chlor alkali industry is exposed to various environmental regulations around the world. Mercury cell production technology has a high risk of polluting water bodies and other ecological bodies. Consequently, lawmakers are implementing stringent environmental regulations on such production processes. In 2018, the European chlor alkali industry already phased out membrane cell technology used in chlorine production after the European Union passed a regulation in 2017. Similarly, regulations are being made around the globe to minimize the impact on the environment. In April 2018, Canada also amended chlor alkali Mercury Liquid Effluent Regulations.
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Vinyl segment dominates the consumption of Chlorine and Alumina leads the Market growth for Caustic Soda
Based on application, the market is segmented into chlorine (water treatment, paper & pulp, inorganics, intermediates, organics, vinyl, and others) and caustic soda (textile, alumina, soap & detergents, organics, inorganics, pulp & paper, water treatment, and others). The vinyl segment dominates the global market in terms of chlorine consumption. Chlorine derivatives are prominently used in PVC production. The chlorine demand often fluctuates in tandem with the production of PVC. Besides, chlorine produces several organic, inorganic, and intermediate chemicals that collectively account for over one-third of global consumption. Water treatment and paper & pulp account for a single-digit share in chlorine consumption.
On the other hand, the alumina segment dominates the caustic soda market in terms of revenue and volume. The increasing use of aluminum in the automotive industry is set to aid the growth of caustic soda consumption. The organics segment accounted for the second-largest share due to the healthy adoption of caustic soda in the organic chemical industry. Textile is the second-fastest-growing segment used for scouring, mercerization, and dyeing in the textile industry. Soap & detergent segment has been one of the first industrial users of caustic soda. The strong presence of alternatives has hampered the adoption of caustic in soaps and detergent applications. Pulp & paper, inorganics, water treatment, and others accounted for around half of the global demand for caustic soda.
Asia Pacific Chlor Alkali Market Size, 2020 (USD Billion)
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Asia Pacific accounted for the largest share in the global market in 2020. China dominates the Asia-Pacific region with over 70% share in the regional consumption. Strong growth in the construction industry has boosted the demand for chlorine used in vinyl production. Besides, substantial growth in demand for PVC pipes in the agricultural sector has further aided the market's growth. The demand for caustic soda has been strongly driven by the adoption of aluminum in the automotive and industrial sectors. Moreover, the paper & pulp industry has also contributed to significant growth. The bolstering paper packaging industry in the region is expected to increase the demand for caustic soda over the forecast period.
North America held the second-largest market share, closely followed by Europe. North America is one of the largest exporters of chlor alkali products in the world. The resurgent construction industry is likely to boost the production of PVC and demand for chlorine over the foreseeable period. The supply in Europe is tight, and the region is a forerunner in achieving green goals in the industry. The demand is expected to increase steadily over the forecast period due to slow developments in the end-use industries. Western European countries such as Germany, France, U.K., Spain, and Italy dominate the regional market.
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The Middle East & Africa is one of the fastest-growing markets. The region is a net exporter of chlor alkali products, and the improving economic conditions in the sub-African region are likely to boost consumption in the forthcoming years. South America accounts for the smallest share in the market. Brazil, Mexico, and Argentina are set to drive regional demand over the forecast period.
Leading Players to Focus on Production Capacities
The chlor alkali market is fairly fragmented around the world. Due to surging demand, there have been continuous capacity additions by leading global and regional players. The growing demand is set to outnumber the presently installed capacity figures over the long-term forecast, creating the need for more capacities in the coming years. Many players have already started to expand their capacities, and some have been evaluating the same. For instance, in September 2018, AGC chemicals issued a press release stating that it has started with evaluations to expand the chlor alkali capacity in Thailand. Post expansion, its plant is set to have a caustic soda production capacity of 590 kilotons.
An Infographic Representation of Chlor Alkali Market
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The market report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, products, and raw materials. Also, the report offers insights into key market trends and highlights vital industry outlook with developments. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years.
This report includes historical data & forecasts revenue growth at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities.
Value (USD Billion); Volume (Kilo Tons)
Application and By Region
Fortune Business Insights says that the global market size was USD 46.26 billion in 2020 and is projected to reach USD 57.63 billion by 2028.
Registering a compounded annual growth rate of 1.94%, the market will exhibit steady growth in the forecast period (2021-2028).
The vinyl segment dominates the global market .
Rising chlorine demand in vinyl production is stimulating market growth.
Olin Corporation, Occidental Petroleum Corporation, Xinjiang Zhongtai Chemical Co. Ltd., and others are key players in the market.
Asia Pacific dominated the global market share in 2020.
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