Chlorine and Its Derivatives    

With the development of China's salt chemical industry, the output and capacity of soda ash and chlor-alkali have increased rapidly. Soda ash has been in oversupply. Chlor-alkali plants mainly produce liquid chlorine and caustic soda. The development of chlorine derivative products is more important because caustic soda is simpler to transport and store than liquid chlorine, and the downstream products of liquid chlorine have much greater added value than those of caustic soda. Moreover, caustic soda itself has a wide range of direct uses but few downstream or derivative chemical products, while liquid chlorine has a large number, many of which have good market potential and development prospects.

China's capacity grows rapidly

The rapid growth of China's chlor-alkali capacity in recent years has promoted and stimulated the development of chlorine-containing products. As of the end of 2009, China's capacity for major chlorine-containing products had reached 30 million t/a (not including ammonium chloride and calcium chloride - the byproducts of soda ash), of which polyvinyl chloride (PVC) accounts for 64.3%. Especially in the last five years, the capacity for chlorine-containing products has grown rapidly, doubling for many products, and increasing 10 times or more for some.
   Products have their own growth factors that can be divided into three categories. First, some synthetic materials and raw materials have been in short supply in China for a long time, such as PVC, methane chloride, MDI (methylene diphenyl diisocyanate)/TDI (toluene-diisocyanate), propylene oxide, epichlorohydrin and chlorinated polymers. The rapid development of the petrochemical and coal chemical industries here have provided sufficient feedstuffs and development opportunities for these products. Second, the rapid development of downstream products and related industries in China has resulted in a rapid increase of demand for some chlorine containing products, such as chlorotoluene, dichlorobenzene, chloroacetic acid, trichlorosilane and chlorinated isocyanuric acid. At the same time, the production of these chlorine-containing products abroad developed slowly, leading to a need for importing these products from China, which has driven the capacity expansion. Third, relying on its resource advantages, China has increased the development of some products such as phosphorus trichloride and phosphorus oxychloride.
   At present, China has the world's largest capacity for most major chlorine-containing products. The most dominant are chloronitrobenzene, chlorotoluene, dichlorobenzene, chloroacetic acid and chlorinated isocyanurate, for which China has 70% of the world's capacity, so Chinese producers can control the global prices and trade of these products.

China's Capacity to Make Major Chlorine Related Products
           (thousand t/a)
Products    Capacity in 2004    Capacity in 2009
                                                                                     
PVC                 5 030    17 750
Methyl chlorides    340     1 250
MDI/TDI             100     1 330
Propylene oxide      450     1 400
Epichlorohydrin     110     600
Chloroacetic acid    130     680
Chloronitrobenzene    400     580
Chlorotoluene       40      120
Chlorinated polymers    250     550
Dichlorobenzene     30      100
Chlorinated isocyanuric acid    140     310
Trichlorosilane     5       233
Benzyl chloride     85      100
Thionyl chloride    25      60
Dichloroacetyl chloride     32      60
Chlorinated paraffin    300     450
Chlorophenol        25      40
Cyanuric chloride    50      60
Phosphorus trichloride/oxychloride    150     400
Chlorosulfonic acid    180     220
Bleaching powder    25      210
Other fine chlorine relating products    1 200    n.a.
Source: CCR
* the data are not accurate enough.


The production levels of chlorine-containing products are uneven

Currently, China's chloride product manufacturers have varying levels of plant scale, technology, product grade & quality as well as the development of downstream products. Take the technical level of chloroacetic acid production for example. Both the advanced continuous acetic anhydride catalytic chlorination process and the outdated batch sulfur catalytic chlorination process are currently used. Some organic chlorine-containing products, producing TDI, PVC, PVC paste resin and some chlorinated polymers with a wide range of quality and grades. Many enterprises have only a few products. They can only produce a small amount of specialty materials. Some cannot even produce any specialty materials. China still needs to import large quantities of the high end products. The unevenness also exists in the safety, environment-friendliness, management and the integration of upstream and downstream products.

The upstream and downstream products are not closely integrated

In recent years, China's chlorine related products industry has expanded its capacity rapidly and blindly but ignored the integration of upstream and downstream products. This has led to weak market competitiveness, weak risk tolerance and poor profitability as well as many safety and environmental issues.
   Upstream, nearly half of the chloroacetic acid factories, all of the chlorotoluene and thionyl chloride factories, and some chloronitrobenzene, chlorinated polymers and chlorinated isocyanurate factories in China do not have their own liquid chlorine units but totally rely on outsourcing. The safety and energy costs of their logistics result in higher production costs and greater safety risks. This does not conform to the principle of low-carbon and circulatory economy. In addition, some enterprises take into account only the market prospects and economic benefits but ignore the risks of the unstable supply of raw materials. Blind construction or a lack of raw materials puts some in a situation where they have no choice but to cease production.
   Downstream, the situation is even more backward. Most chlor