Chlor-Alkali Sector Enters a Key Period of Structural Adjustment    

By Cai Jie, China National Petroleum and Chemical Planning Institute   
1. Rapid growth of scale and strength   

(1) Production  

The average annual growth of the caustic soda capacity and PVC capacity in China was more than 20% after 2002, being higher than the overall growth of the national economy in that period. Due to unduly rapid capacity expansion, the operating rate of production units was reduced from around 80% to 60-70%. The caustic soda capacity in China reached 27.93 million t/a in 2009 and the output was 18.91 million tons, an increase of 13.3% and 8.6% respectively over the previous year. The capacity of PVC reached 17.80 million t/a and the output was 9.155 million tons, an increase of 12.6% and 11.0% respectively. The capacity growth was still higher than the output growth.

(2) Industrial distribution and concentration degree

Geographically, chlor-alkali production in China is distributed in all regions except Tibet, Hainan and Chongqing. Owing to rich raw material resources and excellent market conditions, the chlor-alkali capacity in Shandong and Jiangsu has always held a leading position in China. The capacity of caustic soda and the capacity of PVC in Shandong is more than 6.00 million t/a and 2.00 million t/a respectively, holding the first place in China.
   According to features of energy distribution and policies of industrial distribution, the chlor-alkali capacity in China is gradually shifting to central and western regions in recent years. There are also new and expansion projects in the eastern region, but both the amount and the scale are relatively limited. By contrast, there are quite a lot of new and expansion projects in central and westerns regions such as Xinjiang, Ningxia, Inner Mongolia and Henan. Both the capacity and the output in these regions are growing rapidly and their share of the chlor-alkali sector is constantly increasing.
   Through integrations conducted in recent years, the chlor-alkali sector in China is developing toward large scale and intensive production. There are more large caustic soda and PVC units. The problem of low concentration degree is however not yet thoroughly changed. There were around 200 chlor-alkali producers in China in 2009, the average production scale of caustic soda was around 140 000 t/a and the average output was around 95 000 tons. There were more than 100 PVC producers, the average production scale was around 180 000 t/a and the average output was around 92 000 tons, being much lower than the level in advanced countries. A group of world-class large and super large chlor-alkali enterprises with series product chain, global market competitiveness and an influential voice in the market has not yet been formed today.

(3) Technology

The chlor-alkali sector in China has made rapid technical progress in recent years. The capacity proportion of ion-membrane caustic soda with low energy consumption and small pollution had already increased to around 70% in 2009. A group of new technologies for energy conservation and emission reduction such as membrane-process brine refining, membrane-process denitration, high-density natural circulation ion-membrane cells with membrane (zero) polar distance, dry-process acetylene, low-mercury catalysts, large polymerization reactors of 100 m3 and above, recovery of waste heat, intensive removal and adsorption of hydrochloric acid, and comprehensive utilization of both PVC polymerization mother liquid and calcium carbide residue have started to be disseminated. The research and development of world class technologies such as oxygen cathode cells, ion membrane manufacturing, mercury-free catalysts and plasma-process production of acetylene from coal powder has also made steady advances. Through the introduction from abroad and the research and development by China itself, production technologies for chlorine products such as methane chlorides, MDI, TDI, CPE and epichlorohydrin have already reached the level of advanced countries.
   However, the chlor-alkali sector in China still trails a considerably behind in technology. Metal anode diaphragm-process cells with high energy consumption and small PVC units using the calcium carbide process are still quite common here. There are basically no production technologies for chlorine products with high technical content and high added value such as PC, CPVC, CPP and chlorination-process titanium dioxide. Besides, the dissemination of new technologies such as low-mercury catalysts and dry-process acetylene, due to their problems in operating stably, is also faced with considerable difficulties and obstacles.

2. Great development potential, aggravated market competition

The per-capita consumption of chlor-alkali products in advanced countries is 25-30 kg a year today. It is however only 4-6 kg a year in China. With the sustained rapid growth of the economy, the per-capita consumption of chlor-alkali products will increase here. The chlor-alkali sector therefore has great development potential in China and the market demand for caustic soda and PVC will maintain sustained growth.
   It should however also be noted that China has already gained many years' experience in the production of caustic soda and PVC, and the technology is quite well developed. Except for the ethylene-process PVC production that is still restricted by raw material supply, the admission threshold of the chlor-alkali sector is greatly lowered. There is also overheating and disorder in the development of the sector. The capacity growth is unduly rapid (the capacity of caustic soda and the capacity of PVC increase by 2.00-3.00 million t/a a year), being much higher than the overall growth of the national economy. A group of caustic soda and PVC projects have already been put on file by development and reform commissions of local governments and are waiting for the examination and approval by responsible departments of the state. Caustic soda capacity in China is expected to reach more than 32.00 million t/a in 2012 and the market demand will be around 22.50 million tons. At the same time, PVC capacity is expected to reach 23.00 million t/a and the market demand will be around 15.00 million tons. The intensity of market competition in the chlor-alkali sector will therefore be further aggravated. A group of chlor-alkali enterprises with small scale and no cost competitive advantage will be faced with the fate of being merged or eliminated from the market. The overall development trend of the chlor-alkali sector will be focused on large production scale, enterprise group formation and upstream/downstream integration. Besides, the new chlor-alkali capacity will be concentrated in central and western regions with rich energy resources. A series of concomitant problems such as rational utilization of water resources, environmental protection, safe production and orderly transportation will need to be handled with real earnest.