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The global chlor-alkali market size was USD 49.87 billion in 2019 and is projected to reach USD 55.39 billion by 2027, exhibiting a CAGR of 2.9% during the forecast period.
Chlor alkali manufacturing plants produce two widely used commodity chemicals 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: Downturn in End-Use Industries has dampened Market Growth
The outbreak of COVID-19 has impacted most industrial operations across the world. Disruptions in logistics & supplies, shortage of laborers, absence of end-users, and others are some of the major challenges faced by the industries around the world. During the initial phase of the outbreak, operation rates had fallen sharply and even some plants had to halt production for a few days. Also, the absence of end-users, such as downstream in the market, significantly reduced the demand for these products particularly chlorine. Consequently, key players in the market have reported a decline in revenues in chlor alkali business 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.
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Major Manufacturers Are Shifting Towards Greener Production Technologies
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 the 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. Back in 2017 and 2018, many plants in Europe have 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 sustainable future in Europe which highlighted 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 Market Growth
Chlorine is used in large quantities in vinyl’s 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, in electrical applications, PVC tapes and cases are healthily used due to its unique set of 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 has already phased out membrane cell technology used in the production of chlorine 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 in 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 is used in the production of several organic, inorganic, and intermediate chemicals which collectively account for over one-third of the 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 aluminium in the automotive industry is set to aid the growth of caustic soda consumption. The organics segment accounted for the second-largest share owing to the healthy adoption of caustic soda in organic chemical manufacturing. Textile is the second-fastest-growing segment as it is used for scouring, mercerization, and dyeing in the textile industry. Soaps & detergents segment has been one of the first industrial users of caustic soda. The strong presence of alternatives has hampered the adoption of caustic in soap & detergent application. Pulp & paper, inorganics, water treatment, and others accounted for around half of the global demand for caustic soda.
Asia Pacific Chlor alkali Market Size, 2019 (USD Billion)
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Asia Pacific accounted for the largest share in the global market in 2019. 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, there is substantial growth in demand for PVC pipes in the agricultural sector that has further aided the growth of the market. The demand for caustic soda has been strongly driven by aluminium used 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. India is poised to be the fastest-growing country in the region owing to strong developments. As per Oxford Economics Global Construction 2030 outlook, India’s construction industry is expected to grow twice as fast as China in the coming years.
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, UK, 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 the consumption in the forthcoming years. The Latin American region 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. There have been continuous capacity additions over the years by leading global and regional players due to surging demand. The growing demand is set to outnumber the presently installed capacity figures over the long term forecast which will create the need for the addition of 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 chlor alkali market research report provides both qualitative & quantitative insights on this market. Quantitative insights include the global market sizing in terms of value (USD Billion) and volume (Kilo Tons) across each segment, sub-segment, and region profiled in the scope of the study. Also, the report covers market share analysis, and growth rates of segments, sub-segments, and key countries across each region. Qualitative insights cover an elaborative analysis of market drivers, restraints, growth opportunities, and key market trends. The competitive landscape section covers the detailed profiling of the key players operating in the global market.
Value (USD Billion), Volume (Kilo Tons)
Fortune Business Insights says that the global market size was USD 49.87 billion in 2019 and is projected to reach USD 55.39 billion by 2027.
Registering a compounded annual growth rate of 2.9%, the market will exhibit steady growth in the forecast period (2020-2027).
Vinyl segment dominates the global chlorine market
Rising chlorine demand in vinyl production is stimulating market growth.
Olin Corporation, Occidental Petroleum Corporation, Xinjiang Zhongtai Chemical Co. Ltd., and others are some of the key players in the market.
Asia Pacific dominated the global market share in 2019.
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